Depreciation: Can I claim previous renovations?

Posted by Simon Dehne on July 21, 2016 in Latest News with No Comments


It’s not uncommon for investors who purchase existing properties to assume that any renovations which have taken place prior to settlement cannot be claimed.

Those who assume this couldn’t be more wrong. Deductions for income producing properties can be claimed in two ways; as capital works deductions for the building structure, and as plant and equipment depreciation for any easily removable assets.

While restrictions apply to capital works deductions based on the construction completion date of the property, there are no date restrictions for plant and equipment assets.

Deductions for plant and equipment assets are based on an individual effective life outlined by the Australian Taxation Office and calculated from their depreciable value from the date of settlement.

While income producing property owners can claim capital works on any property constructed after the 15th of September 1987, often properties older than this will have undergone renovations since this date.

Owners of both old and new properties can claim renovations done by previous owners so long as the work was commenced within the legislated dates.

Unlike plant and equipment assets, capital works deductions will be calculated based on the historical cost of construction and deducted at a rate of 2.5 per cent per year over 40 years.

For example, an investor purchased a property originally constructed in 1993. A deck was added to the property in 2005. The owner is eligible to claim capital works deductions for the remaining eighteen years on the original construction and thirty years on the construction costs involved in the deck at a rate of 2.5 per cent per year.

To discover what depreciation deductions you can claim in an investment property use the handy BMT Tax Depreciation Calculator or contact one of BMT’s expert staff on  1300 728 726.

Article provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.  Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.Renovating_deck

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