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  • Claiming of Driveway via Tax/Loss

    Hi Guys

    Just a question here; at the end of last year we hired a contractor in to remove some trees from our backyard; during the process his heavy digger cracked our entire driveway and we had to get it replaced.

    There was months of going back and forth with the disputes tribunal but in the end it was found that he contractor was liable for the damage; I have all the paperwork relating to this.

    Question now however is how do we go about claiming the driveway in terms of the tax loss etc.?

    Thanks

  • #2
    Originally posted by Sifu View Post
    Hi Guys

    Just a question here; at the end of last year we hired a contractor in to remove some trees from our backyard; during the process his heavy digger cracked our entire driveway and we had to get it replaced.

    There was months of going back and forth with the disputes tribunal but in the end it was found that he contractor was liable for the damage; I have all the paperwork relating to this.

    Question now however is how do we go about claiming the driveway in terms of the tax loss etc.?

    Thanks
    The disputes tribunal awarded you to claim the costs from the contractor . If the contractor pays you for the loss there would be no tax loss to claim. In effect if he does not pay you you can offset the loss against any profit.

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    • #3
      There's a timing difference between the tax years, though. Paying less tax, earlier, and more later.

      One tax position would be to claim the full expense in the year it was paid, and return the reimbursement from the contractor as income in the year it was received.
      The other would be to offset the two, and claim any shortfall in the year it was paid.

      Both are justifiable positions to take, but the latter requires less work in the case the IRD asks any questions later on, and your return is less likely to be held up in review due to large R&M claims.
      AAT Accounting Services - Property Specialist - [email protected]
      Fixed price fees and quick knowledgeable service for property investors & traders!

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      • #4
        Originally posted by Anthonyacat View Post
        There's a timing difference between the tax years, though. Paying less tax, earlier, and more later.

        One tax position would be to claim the full expense in the year it was paid, and return the reimbursement from the contractor as income in the year it was received.
        The other would be to offset the two, and claim any shortfall in the year it was paid.

        Both are justifiable positions to take, but the latter requires less work in the case the IRD asks any questions later on, and your return is less likely to be held up in review due to large R&M claims.
        Thanks Guys

        I forgot to mentioned that the contractor still hasnt paid me anything and it was the insurance company that made any payments!

        Taking this into consideration, is it still possible to claim depreciation on the driveway or is that not possible?

        Thanks

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        • #5
          Hi Sifu,

          If there is no cost to you, then there will be no overall claim. You can’t depreciate something that cost you $0, and you can’t claim repairs for something that didn’t cost you anything.

          Ross
          Book a free chat here
          Ross Barnett - Property Accountant

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          • #6
            Originally posted by Rosco View Post

            If there is no cost to you, then there will be no overall claim. You can’t depreciate something that cost you $0, and you can’t claim repairs for something that didn’t cost you anything.
            Depending on the timing of the incident, I would imagine that a partial year's depreciation (up until it occurred) would be claimable, as well as the excess?
            My blog. From personal experience.
            http://statehousinginnz.wordpress.com/

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