Tax Q&A: Inheritance of Existing Investment Property
Q: I have a question related to depreciation. I bought a new apartment in July 2016 and lived in it for 13 months. I started to rent the apartment from the end of October 2017. My question is, following the change to depreciation rules, am I able to claim depreciation for plant and equipment (dishwasher, fridge, etc)?
The property was brand new when I bought it, so I’m hoping depreciation benefits will still be available. I also have a query regarding depreciation and inheritance. If a married couple have an investment property and they are claiming plant and equipment depreciation, and then one spouse dies, can the surviving spouse (who inherited the existing investment property) continue to claim the plant and equipment depreciation?
Many thanks, Sam
A: With regard to your first question, unfortunately you won’t be able to claim depreciation on existing plant and equipment assets due to the recent change in the depreciation legislation in May 2017.
These changes affect second-hand investment properties that were purchased and/or rented after 1 July 2017, as in your case. In these situations, plant and equipment assets are considered pre-existing and previously used.
The depreciation on your plant and equipment assets began when you purchased your property.
But they only became depreciable against your income when you started to rent out the property after 1 July 2017. You can claim plant and equipment items such as a new dishwasher, fridge, etc., if you bought these new and installed them in your second-hand property.
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We are pleased to announce that Stephen Cooke has joined Napier & Blakeley as an Associate Director to manage our Transaction Advisory team in Sydney. As part of our national team Stephen will also manage instructions throughout NSW and the ACT, and on National Property Portfolio acquisitions and disposals as they come to market.
Stephen is a trusted advisor who understands stakeholders desired outcomes throughout property and development cycles. He has a proven track record in identifying, assessing and mitigating a broad range of property risks associated with:
Stephen has over 15 years of professional experience – 11 of which were spent in Sydney, advising a range Australia’s leading property Investment and Development Groups who are both local and international stakeholders in the property investment sectors.
He will also work closely with our NSW Quantity Surveying Division, on some new large development projects coming to fruition with a need for both cost risk planning and development due diligence on the documentation, programme, heritage issues to be considered and the general services design assessment which may include GRESB and NABERS reviews.
For any further information or simply to say hello to Stephen you can contact by any of the following methods:
Stephen Cooke
Associate Director
m. 0409 228 552
e. scooke@napierblakeley.com
a. L8, 20 Hunter Street, Sydney NSW 2000
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