Building depreciation has gone, is a Chattels Valuation worth it for residential ?

[spaceman]

With fewer words than Ahar

im from Australia - now why did IRD remove buildings depreciation?

To increase their revenue.

Cheers
Spaceman

[Rosco]

I was in this same position deciding whether or not to get a professional Chatels valuation. In the end I decided I would get one done and was so pleased that I did.

My (conservative) estimate of chatels value was around $16k. I wasn't exactly sure what could and couldn't be included so I went on the safe side. I wrote it all up on a form my accountant gave me but then I decided I would get a valuation firm in anyway to give me more confidence in my numbers.

The valuation came back at $49700! The valuation has paid for itself after about 2 months!

Just remember that not everything on the chattels valuation report is necessarily claimable as a seperate chattel. Keep well away from claiming depreciation on partitions, electrical wiring, plumbing etc, as these are definitely part of the building!

Ross

[artemis]

I would recommend reading the IRD document IS10/01 Residential Rental Properties—Depreciation of Items of Depreciable Property which sets out a 3 step test for determining what is separately depreciable and gives examples. IS10/02 might also be useful -covers what is a 'building'.

[gumbii]

Just remember that not everything on the chattels valuation report is necessarily claimable as a seperate chattel. Keep well away from claiming depreciation on partitions, electrical wiring, plumbing etc, as these are definitely part of the building!

Ross

I was making an assumption (but we all know what they say about assumptions) that everything stated on a Chatels valuation would in fact be claimable as a Chatel. Is that not correct?

[Ahar]

Not the accountant here......but.....

I should thnk it depends on when the chattels valuation was done...... e.g the valuation on my rentals is now "incorrect" in that a substantial proportion of "chattels" are now "building" and hence now not depreciable.....my accountant will adjust further depn claims

I sudder to think that the valuers are incorrectly classifying such things as kitchens, bathrooms, plumbing etc.....they are all well aware of the law change.

But be aware of buying an IP where the vendor/agent "helpfully" provides you with an outdated list of chattels or claims that the depn will be/should be such and such figure.

[Wayne]

Not the accountant here......but.....

I should thnk it depends on when the chattels valuation was done...... e.g the valuation on my rentals is now "incorrect" in that a substantial proportion of "chattels" are now "building" and hence now not depreciable.....my accountant will adjust further depn claims

I sudder to think that the valuers are incorrectly classifying such things as kitchens, bathrooms, plumbing etc.....they are all well aware of the law change.

But be aware of buying an IP where the vendor/agent "helpfully" provides you with an outdated list of chattels or claims that the depn will be/should be such and such figure.

The chattels valuation will seperate all the items out - doesn't mean that they can be depreciated seperately from the building. All I do is depreciate the 'building' ons at 0% - that way if the rules change again late I still have a starting valuation.

[Rosco]

I was making an assumption (but we all know what they say about assumptions) that everything stated on a Chatels valuation would in fact be claimable as a Chatel. Is that not correct?

Depends on the valuation and who did it. But generally not all items claimable. Many are now building, and no depreciation.

If you read a chattels valuation it generally recommends that you seek specialist tax or accounting advice!

Ross