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Depreciation Differences: Old v's New Residential Properties
New properties have new fixtures and fittings, so the starting value of those items will naturally be higher resulting in higher depreciation deductions.
Items such as carpets, stoves, blinds, hot water systems are all items that can be depreciated, there is also a deduction available for the wear and tear on the structural elements of a building, this is commonly called a 'building write off'.
New buildings will receive a higher deduction for their 'building write off'. 2.5% of the cost to build the structural part of the building can be claimed per year for 40 years. Construction costs generally increase over time making building write off deductions for new buildings higher at any given time.
Properties that are not brand new can claim the residual of the 40 years. If a residential building commenced construction before the 18th of July 1985 there is no building write off available. Investors who own properties that were built before this date are still able to make a claim on the fixtures and fittings for the property and include any recent renovations, even if the renovation was carried out by a previous owner.
Rawson Homes recommends investors review the benefits of purchasing new against old before commiting to any existing properties available within the marketplace. |
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