Depreciation rate for new (electric) heat pump

[jksmurf]

I recently (June-2007) had a new electric heat pump installed in my house which I rent out.

I would like to add this heat pump to the chattel list and depreciate it, but IR265 (Part 2) does not have an entry for Heat Pumps, only Heaters (electric) and I don't believe this is correct. I see from a search of this forum that it is bit like an airconditioner (in reverse) - or a fridge, but IR265 Part2 (RESD) doesn't list that either. I can see two ways to go, but there may be others.

1. I assume it is an IRD265 Part 2 Residential Rental Property Chattel (default class), 5 yrs and the 48%/36% apply values apply? (Seems high though, as a fridge lasts 8 yrs, and the forum's consensus is a good one lasts 10 yrs).
2. I write to IRD using form IR260A for a NEW chattel type (i.e. with no listing in IR265) and try and suggest a rate.

For (2) the rates would be based on a "similar device" I guess, and IR265 (Part2) BDFO (Building Fit-out) have rates for through-window Aircons (closest device in terms of how-it-works to a heat pump) of 24% and 16.2% (10yr life).

Has anyone else depreciated this item in a RESD property?
I presume DV or SL +20% loading is correct, being a new chattel?
I believe IR260B does not apply as I'm not trying to change the rate for an existing chattel.

Thanks & Rgds

[essence]

Add to the IRD chattels list

Hi

Heat pumps are becoming more common in both PPORs and IPs.

It would not be unreasonable, IMO, to write to the IRD and request that they add HEAT PUMPS to their chattel list.

What they do and how quickly they respond is a whole different matter.

Good luck and could you please let us know how you get on??

[SuperDad]

I am using 8.4% SL and 12% DV.

I'll have a look now to see where those rates are from.

Paul.

[SuperDad]

I am using the wrong rate.

It should be 16.2SL and 24DV.

Here is the link: https://interact2.ird.govt.nz/forms/...76C66738F4.frc

Scoll down to Pumps (heat).

Paul.

[SuperDad]

Sorry.

I realise there is a problem with the link I have supplied.

Type "pumps" into the asset search box.

Paul.

[jksmurf]

I am using the wrong rate.

It should be 16.2SL and 24DV.
Scroll down to Pumps (heat).

Paul.

Thanks essence, I did write to IRD, but it will take a week or so to hear back.
SuperDad, it seems reasonable from the rates (like the aircon rates), so I think I will go with those, as I can justify both ways if audited.

From a purely semantic perspective, I'd guess a "heat pump" (like an aircon) has more components than just a Pump that pumps heat, but like I said, same rates as aircon, so I'll wing it with that.

Thanks once again.

k.

[jksmurf]

btw, can I assume that if I am NOT GST registered, I can include the GST in the purchase price?

How about installation cost, can I include that too?
Ta

k.

[CJ]

btw, can I assume that if I am NOT GST registered, I can include the GST in the purchase price?

How about installation cost, can I include that too?

I would include both.

[Green Fish]

I've been grappling with this same issue re GST: When you do your income tax return, do you take out the GST component, or leave it in?

Our family trust used to conduct a "taxable activity", namely, leasing the farm for grazing, progressively subdividing it, and then selling off 1-2ha lifestyle blocks. Everything subject to GST obviously, which turned out to be very expensive. But now, the money is in the bank, and the only other asset is a rental unit, which is exempt from GST. So I don't make any claims for GST deductions, on the assumption that the trust no longer engages in any taxable activity.

The trust earns its income from interest and from rent from the unit. Money is spent on the usual things. If the trust pays 3k for body corp levies, GST included, what amount do I deduct? The full 3k, or 3k minus the GST component?

[ream]

Not sure about your situation GF but in general with rental property, if the GST is a cost which you can't claim back, then it's an expense to you and has to be included in the return. So the IRD have told me (which doesn't mean a lot I know) and so commonsense would tell me (also not 100% reliable LOL).

Eli

[Perry]

Tut, tut, Eli. How dare you? Go wash
out your mouth with soap! The very idea of
including the IRD and common sense in the
same sentence is beyond an oxymoron!
__________________________________

[ream]

Hey! But I was meaning them as 2 totally separate reasons. The commonsense referred to was definitely MINE, not the IRD's. For once they just happened to coincide, which means that the IRD will obviously be saying something else if anybody else calls them!

[Perry]

All is forgiven, then. (By me, at least.)

[CJ]

Not sure about your situation GF but in general with rental property, if the GST is a cost which you can't claim back, then it's an expense to you and has to be included in the return.

I agree. I would also have thought that even when carrying on teh taxable activity (farming) the rental property would not have been a taxable activity so GST could not be claimed on those items (but can be expensed for tax purposes).