Hi property gurus.
Its nice to meet so many experienced investors.
I have some questions here.
I purchased a house as my PPOR and I have to live here for another 3 months so that I could keep my FHOG.
I plan to move out in 3 months and this PPOR comes an IP. I understand this PPOR will be not be subjected to CGT I follow the 6 year rule.
Q1. Can I still claim depreciation on this PPOR after it becomes an IP.
Q2. What happens to the repair and improvements I have done on the PPOR before it comes an IP?
Thanks for your time and help.
Regards
Q. 1. I believe you could claim depreciation as the property is a rental. But I think there is some debate on whether you are entitled to claim it on your main residence when you are claiming the absence exemption. But you would only apply the 6 year rule if you sell, until then there is nothing to distinguish it from a normal rental. Not sure how it would be treated then, if you had sold.
2. Repairs couldn't be claimed, but may lead to claims of depreciation. For improvements, depending on what it is you would claim depreciation on it at least and any interest incurred.
I am not an accountant tho.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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employ a`quantity surveyor to work out what you can depreciate.
Q1. Yes.
Q2.
It can be depreciated also. if you buy a capital item ($1000) and install it today 9/8/10, live in the property until 9/11/10, and then rent it. Your depn for 2011 would be:
Using DimVal method, 8yrs useful life.
deductible portion 2011 = portion rented * 1st year depn = (234days / 326days) * ($1000 * 25%) = $160
deductible portion 2012 = ($940 * 25%) = $235
and so on…But thats only capital items, any expenditure which is considered to be repairs or maintenance before the property is initially rented is not tax deductible.
Hope that helps!
Hi Guys
Thank you very much for your help.
I assume stuff I bought years can still be depned if I employ a`quantity surveyor.
Hi I' looking for a good property accountant in BNE bayside area to help me with seting up tax effective stratergies.
What I don't need is another "wealth creation" group trying to flogg me an overpriced property investment package.
Any ideasaque wrote:I assume stuff I bought years can still be depned if I employ a`quantity surveyor.Yes it can. But the schedule they provide you with will include the depreciation on any additions of your own.
ie: if you install a hot water system today, and a QS goes through tomorrow, the QS depn schedule will include depreciation on the HWS. of course, if a QS goes through today, and you install the HWS tomorrow, then you will have to depreciate that HWS in addition to the amounts claimable per your QS schedule.
HI Mr5o1
Thanks for your reply.
I guess it is better to do any improvements or maintenance after it becomes an IP.
Q3. How do I notify ATO my PPOR becomes a rental? Can I still have all my mails sent to that address? I mean, it will be rental but it is still my PPOR so I do not get CGT. A little confused about evidences.
I guess I really need to talk this to my accountant.
Thank you for your time
No evidence is required, you do not need to have mail sent to that address whilst it is a rental in order to claim the 6 year PPOR exemption extension.
To claim the extension, you simply elect to do so when the CGT event occurs, and prepare your capital gain calcs accordingly.
There’s some really good info here:
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htmThanks for your reply.
If I get some improvement or repair work done now and ask tradies to have the invoice date after my PPOR becomes an IP, is it legal?
Heheh.. obviously the proper answer to that is:
“no its not legal”but if I wasn’t me I’d say:
No its not legal to ask them, but if they do it then it’s a legal document (or will appear so anyway).That said.. if its an improvement then the date wont matter so much because the cost will be depreciated during the time the property is rented anyway. So your better off getting them to change “repairs to hot water system” on their invoice to “install new pipe/ valve/ tap” whatever. The latter can be depreciated, the prior needs to be claimed on the date of the invoice.
If its a repair then as you can imagine, a $1000 repair bill, 2 weeks after the property is first rented might look a bit suss. So I guess it depends a bit on how much the repair bill is, and how far forward the tradie is willing to put the date.
good luck!
Hi Mr501
Thank you for your kind help.
I am wondering if you are an accountant and willing to take a new client? If so, could you PM me your details?
Regards
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