Comments on: Do you know how to depreciate rental property improvements correctly?

By: Rob

Rob — Sat, 14 Sep 2024 04:41:34 +0000

I had a few depreciable items that failed that I had to replace. All the items had a depreciable balance when I replaced them but my tax agent changed the balance to zero but didn’t claim the remaining depreciable balance. Is this correct? According to my understanding of scrapping I could have claimed the remaining deprciable balance of the item that failed as an expense?
I sold the property in December 2023 and will have a CGT liability when I put in my tax return. Can I amend the previous returns or can I just have these unclaimed scrapping amounts added to the cost base to reduce my CGT liability? I was reading somewhere on your website about CGT Event K7 although I built my property in 2012 so it was a new property and before the 2017 legislation.
Would be grateful for any comments on this scenario

By: BMT Team

BMT Team — Fri, 26 Nov 2021 02:48:29 +0000

Hi Rob,

Thanks for your comment.

It depends if the vinyl flooring is impacted by 2017 depreciation legislation changes. So, if you purchased the property second-hand or lived in the property after 9 May 2017 and the vinyl was pre-existing in the property then you’re ineligible to claim depreciation from it. This is because vinyl flooring is a plant and equipment asset that is directly affected by this legislation.

However, if you purchased the property brand-new, or purchased it second-hand and had the vinyl installed once you owned it then you should be able to claim scrapping on it.

We definitely recommend discussing this further with your accountant if you require additional advice.

Thanks,
The BMT Team

By: BMT Team

BMT Team — Thu, 25 Nov 2021 21:57:30 +0000

Great article!
I have vinyl plank flooring which is not fit for purpose. I think it was laid incorrectly.
I was going to rip it up and either replace with floor tiles or a combination of floor tiles and carpet.
I was going to rip it out in the financial year just gone and claim the balance of the value as scrapping but when I asked the accounting firm I use about scrapping the balance of the book value she said I couldn’t.
Is there somewhere on the ATO website or legislation that I can show my accountant?
I have a significant depreciation closing balance of about $5,000 I was hoping to write off.
Based on what she said I haven’t gone ahead and ripped the flooring out yet.
Thanks in advance.
Kind regards
Rob