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Timing of Expense Deductions

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  • Timing of Expense Deductions

    I've recently gone unconditional on my first IP purchase. Everything is done, deposit is paid etc, however, the settlement is not until 30 September. My question is when do expenses incurred in relation to the property become deductible? I'm assuming that everything up until now has only been preparatory, however I will no doubt incur some costs between now and settlement, and would like to purchase a few bits and pieces for the property (smoke alarms etc) in advance of taking possession - will I be okay to claim these, or should I wait until after the date of settlement to spend any more money?
    Side question - is there a dollar value that everything below that amount you are allowed to expense, irrespective of whether or not it is capital in nature? For some reason I have $500 in my head.

  • #2
    I would say that anything you buy BEFORE the property becomes available for rent (note: AVAILABLE for rent ..not rented) you won't be able to expense.

    As for $500 ....you are correct.

    Low-value assets, that is, assets that cost $500 or less, are deductible in the year they are acquired or created provided:
    • they are not purchased from the same supplier at the same time as other assets to which the same depreciation rate applies (unless the entire purchase costs $500 or less)
    • the assets will not become part of an asset that is depreciable, for example, the cost of materials to build a wall in a factory
    • they were purchased on or after 19 May 2005 (the threshold before 19 May 2005 was $200.00)