Air conditioning

I have a townhouse in Northgate, Brisbane which is in a complex of 4 units. The other 3 have air conditioning and I am leaning towards purchasing a similar air conditioning unit to the other 3, mainly because I have a good tenant and the townhouse is a long term buy and hold. The cost of the a/c unit is around $2000, I thought about borrowing the $2K thereby making the cost around $150 per year (tax deductible). Can someone give me some guidance? The borrowed $2K do I send it to the RE agent and then the RE agent puts it into the rental statement so my accountant can they pick up on the transaction. How does the depreciation of the A/C work? Do I just tell my accountant?

Thanks

Liverpool St

 

Hi Bob

If you borrow to put in an a/c unit, then you have two deductions, the depreciation on the a/c and the interest on the borrowings.

The simplest thing to do is for you to buy the unit and have it installed. Then tell your accountant the purchase price & date of the unit. The borrowings if added onto the loan for the property just form part of the interest deduction. If the borrowings are from another source, then you need to inform your accountant of that too, AND importantly you should ensure that these borrowings are not muddied with personal borrowings.

 

You need to find out how the tax office depricates the air conditioning. They will say it has a life of say 7 years, and you depricate the value of the unit over 7 years.

Plus interest on the unit as mentioned above.

 

A/C

crc_error/MattR

Thanks

 

Bob... or is it Liverpool St? I'm confused

But, I digress....

Air con is a must for the poor tenants in sunny Qld- most of them will pay more to have it but just a tip, so that you don't end up with the expense of a new unit or repair possibly down the track....

When you do get it installed get it written into the lease special conditions that the filter is to be cleaned on a regular basis (most require cleans every 6-8 weeks) and that, just like other maintenance of appliances, it remains the tenant's responsibility. I've seen a lot of absolutely disgusting air con filters, grimy and virtually so clogged with dust it's amazing they're still operating effectively; some tenants aren't aware of how to keep the filters clean either, so you may be doing them a favour as well. A clean filter also ensures the system isn't straining and costing more in power charges.

Best of luck with it all.

 

Jacque,

Thanks for the tip. You don't have to be confused about the name. I'm with Defence and I couldn't sign on at work, it threw a wobbly (too much cypher gear) so I just set up a new sign on..

Bob/Liverpool St