Houses Don't Depreciate?

[k1w1]

Say what?

I was in the Far North last week and saw some houses (around Moerewa for instance) that certainly have depreciated. Lack of maintenance will do that to a property, you know.

How the hell are these people spouting this crap?

[rob82]

Of course they depreciate, however the rate you can claim depreciation far outstrips the actual depreciation and loss of value in my opinion...especially if the market is rising.

This is a generalisation, but then again so is looking at a few houses in the far north.

[k1w1]

From Moerewa are we?

I agree with you. What I object to are the soundbites coming out of the media and pundits that they don't depreciate and that the claims for depreciation are somehow rorting the system.

[Mark_B]

Perhaps the issue isn't that houses don't depreciate it is that the TWG saw inadequate evidence of landlords dipping into their own pockets to properly maintain their investment?

[WBuffett]

Lets face it the depreciation allowance is just free money and most investors treat it as such. The routine maintence that is done is tax deductable anyway, if investors are not keeping up with maintence and using the "bonus"
depreciation allowance to do so and then complaining that their property is ...shock horror deprecating!!!! its their own fault.

Maintence is a cost, and not doing any maintence will end up costing you more.

[k1w1]

I don't follow, Warren. In my business, my company car depreciates (claimable) and the maintenance on said car is also claimable. What's the difference?

[WBuffett]

The day you drove the car out of the dealership its value dropped by 30%
The day your bought your invesment property, the value remained about the same the next day.

[orion]

I tend to agree with Warren Buffett on this one.
A lot of investors rely on the depreciation to make the deal and their cashflow work. If the depreciation soon is no longer claimable, I think some investors may struggle a bit in the short term or even need to sell some properties, but long term I think it will be a good thing.

Regards
Graeme Fowler

[Halfway To Paradise]

If depreciation on the house is stopped I wonder if we will still have to refund the depreciation when selling (at a profit).

[k1w1]

That's true, Warren, but you can't deny that the house WILL depreciate, just slower than a car. Therefore conceptually it's right to allow depreciation, just at a different, more realistic %.

[dandan]

That's true, Warren, but you can't deny that the house WILL depreciate, just slower than a car. Therefore conceptually it's right to allow depreciation, just at a different, more realistic %.

I saw 80s mini's selling for $1500 in the early 90s. Now I see 80s mini's selling for $4000+ so I guess vechicle depreciation should be scrapped as well

[WBuffett]

That's true, Warren, but you can't deny that the house WILL depreciate, just slower than a car. Therefore conceptually it's right to allow depreciation, just at a different, more realistic %.

The house itself if you exclude all the fancy depreciation rorts like wiring, nonstructural walls, etc it depreciated at about 1.5% straightline ? I can't remember, which is probably about right. But with all leeway the current rules give, where people put new carpet in their residential property and then get depreciated as part of a investment property over 5 years, all that kind of nonsense that goes on, people are exploiting it to its fullest extent and then going beyond that. ..I don't believe the house/chattels depreciate as much as is being currently claimed, my non-expert opinion.

[WBuffett]

I saw 80s mini's selling for $1500 in the early 90s. Now I see 80s mini's selling for $4000+ so I guess vechicle depreciation should be scrapped as well

Those 80's minis have had $4000 worth or repairs in that times, so its probably fair.

[dandan]

Those 80's minis have had $4000 worth or repairs in that times, so its probably fair.

Nar just kept in a garage and used as grandmas shopping car once a fortnight.

You keep your rental house in a garage and only walk through it for an hour a fortnight and it will depreciate less.

A house will always depreciate in value if you use it and leave it out side.

If the tax people want money from building value increases due to increased labour and material etc costs why not suggest a building tax along with their land tax or how about just a profit tax or a tax tax. I think they want a profit tax but are trying to hide it under another name, Like in ausi when they changed death duty to estate duty.
Many Small businesses are started and maintained with rental property profits.
I wonder if a full depreciation strip or property tax would cause a resession? The Economy is very connected.

[k1w1]

I saw to my gf in the back seat of mine. Not sure the tenants would appreciate the same if I borrowed the master b/r for a couple of hours. Would that affect depreciation?