Hi All,
We are planning to renovate our 2 bedroom apartment, the theory being we renovate and hopefully within 12 months we buy a house and keep the apartment as an investment.
We are looking at installing timber floors in the living room and kitchen area, repainting, upgrading some of the light fittings, and put in a new kitchen.
The apartment is in a 36 year old block in north parramatta, sydney.
I am wondering if i will have access to tax breaks on these renovations and if so what proportions.
i am hoping to keep under a budget of $12K.
thanks for your help in advance
Jose
I am no expert but I think your $12k is capital expenditure so it raises your capital base (relevant for CGT if you sell).
Then when you rent it out you can depreciate the $12k you spent. (as opposed to claiming anything now. )
Hi Jose,
After your reno is done, get a qualified quantity surveyor to prepare schedule of depreciation.
This report gives the precise idea of how much you clam of depreciation from ATO and relevant for CGT.
Cheers Leo
Hi Leo,
Thanks for your reply, do you know of a good quantity surveyor in Sydney?
thanks
Jose
try bmt QS
We get a company discount with them. If you would like, send me an email and I'll give you our form to use with them so you get our discount.
You can only get depreciation once it's an IP. Everything is depreciated, not just the renovated bits.
I think you are better getting the depreciation report when you are ready to make it an investment property as you can't claim anything until then.Use http://www.depreciator.com.au
Send an Email explaining your circumstances. They will advise you as to when to do it and approximate cost.
Can anyone who regularly renovates advise whether I am best to get cash jobs so it’s cheaper or should I always get receipts for work carried out. Eg materials and labour
I am a little unsure of what can be claimed and what can’t.
If I have a depreciation report do I still need receipts?
Cheers
Jacqui
It depends on the discount. If someone offers me 10% discount I'm not interested as I'll save more than that on tax. But having said that it's a long time to get that money back if using buy and hold method.
I should probably check with an accountant to see what they recommend?
Is your accountant based in Sydney?
I was thinking of trying bantacs accountant, I think they have an office in burwood.
Accountant wont really help, you can call a quantity surveyor and ask questions. But from a non expert who has done this before, you can claim all renovations regardless of when they were carried out (after 1985). If you don't have receipts then the Quantity Surveyor is qualified to estimate the values by visiting the property. If you have receipts you can save money on the QS if they don't have to visit the property.
They claim is based on useful life of the items, and depends on whether it is considered plant or equipment. Plant is a straight 2.5% per year. The rate of equipment depreciation is more complex, each type of item has a different rate. Also there are two methods of calcultion, deminishing value, and prime cost, it's your choise.
This website can give you a rough estimate for initial calcs, http://calc.washingtonbrown.com.au/wbdcalculator/calculator.aspx?RID=ZOCV2FNY2F
I should add that claiming a repair is a different matter. You can only claim repairs after the date the property is leased or advertised for lease. And it must be repaired to original condition not improved. Then you can claim 100% in that year.
If it’s an IP and your earning income on the property can you claim renovations on tax? Is it the same if your negative gearing?
Also is it true there’s a difference between replacing what was there and improving? Where is the line? Isn’t any kind of repair work improving the property?Jacqui, if you are paying cash for electrical, plumbing or building works, tradies will not usually give you certification papers. Paying the extra for this can save your butt in many situations
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