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PPOR to IP: Requirement for depreciation schedule

Discussion in 'Accounting, Tax & Legal' started by somebodyhere, 22nd Aug, 2013.

  1. somebodyhere

    somebodyhere Member

    Joined:
    11th Sep, 2009
    Posts:
    13
    Location:
    Sydney, NSW
    Hi All,

    I hope someone can help me regarding the requirement for a depreciation schedule. I am purchasing my first property and will be aiming to make use of the six year rule of CGT exemption. I've done a lot of research so I'm reasonably familiar with how it works now. This is just a small piece of the puzzle I haven't yet worked out.

    Suppose on 1 January 2014 I purchase PPOR and live there for 6 months until 30 June 2014.
    From 1 July 2014 it is then rented out.

    I understand that I am taken to have "acquired" the property when it first becomes income producing, so my cost base will be the market value on 1 July 2014 (unless I move back in within 6 years, in which case it'll be CGT exempt).

    In order to claim depreciation during the period in which it is an IP, do I need to engage a quantity surveyor to prepare a depreciation schedule on 1 July 2014 when it is first rented out, or can I use one I obtain on 1 January 2014 when I purchase the property? If the property is purchased off the plan, do I normally get a depreciation schedule from the developer?

    Thanks.
     
  2. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    In relation to the property developer providing a depreciation schedule, I do not believe there is a requirement that they do. However for some of the larger developments, they may provided as part of the marketing targeted to investors.
    In terms of the depreciation schedule itself, you could use either date to engage the quantity surveyor. It is listed per year for 40 years so it will show the 6 months to June 2014, then 2014/5 year onwards.

    Take care with the 6 year CGT rule that you do not have another PPOR in that time.
    Greg
     
  3. somebodyhere

    somebodyhere Member

    Joined:
    11th Sep, 2009
    Posts:
    13
    Location:
    Sydney, NSW
    Thanks Greg