Building Depreciation

[Rosco]

Building Depreciation ceases from 1/4/11
Building Depreciation ceases from 1st April 2011. This means you can still claim for the year ending 31 March 2011. You can also still claim chattels depreciation.
If you have purchased an investment property within the last 2-3 years, and have not claimed chattels depreciation we suggest you look at www.valuit.co.nz or else contact Ross to discuss this further. It may be possible for you to get a chattels valuation done now, so that you can depreciate chattels for the year ending 31/3/11 and onwards.
Generally it will make sense to obtain a chattels on newer, more expensive properties. For every cheap properties with a small amount of chattels, it may not be worthwhile.
If you have done improvements to the property, we will use the cost value of these improvement for depreciation purposes. For example if you rip up all the carpet and put in new carpet for $10,000, this will be our opening value for depreciation.

I'm sure most of you will already know about this, but thought it was worth sticking up this information again, just to make sure everyone is aware of it.

Ross

[NZGEMS]

Is the chattels depreciation ceasing too Ross?

[Rosco]

Hi Robyn

Yes, you can still claim chattels depreciation.

Ross

[Ahar]

Hey Ross, my accountant has told me that most chattels are now regarded as part of the building and hence the really big depreciation expenses will be gone.

Is there a definitive list of what now constitutes a chattel?

Can you enlighten us?

[CJ]

Is there a definitive list of what now constitutes a chattel?

Have a look at this thread: https://www.propertytalk.com/forum/sh...ad.php?t=28179

In it I link to the IRD paper on what is a building and what is a chattel.

[Rosco]

Hey Ross, my accountant has told me that most chattels are now regarded as part of the building and hence the really big depreciation expenses will be gone.

Is there a definitive list of what now constitutes a chattel?

Can you enlighten us?

The big depreciation normally comes from carpets and curtains, and they still definetly remain.

The IRD have put out their intrepretation, but that doesn't mean it is correct.

It's like most things with IRD and tax, and that is to take a reasonable approach. In the past some tax payers have been too agressive, so IRD have put out their intrepretation to try to stop this. One of the main problems were
- Partitions (non load bearing walls)- Always been a joke to depreciate these seperately to building for residential. But for commercial, that is completely different.

Ross

[flyernzl]

"Our disposable, leaky homes: Kiwis 'always try to build cheap'

ANALYSIS: Many Kiwis probably buy a house assuming they have bought a house for life. Not necessarily so.

New Zealand homes actually have surprisingly short lifespans. Maynard Marks Limited director Stuart Wilson said many Kiwis became "quite upset when they found out" houses have minimum lifespan requirements of just 50 years for the building's structure and 15 years for the durability of the exterior cladding.

Wilson, a chartered and registered building surveyor, said when cladding started to deteriorate after 15 years it still satisfied its legal requirements under the Building Act, "which often surprises people - when you consider that you build a house and you expect it to last essentially forever".

<snip>

O'Sullivan agreed, adding: "People don't take into consideration the proper depreciation of the house, or the land value."

https://www.stuff.co.nz/business/pro...to-build-cheap

This cant be right!

Bill English, as Finance Minister, removed the depreciation allowance for investment property in 2010 on the grounds that houses do not depreciate.

As a politician, he obviously knows far more about housing than these experts, so they must be wrong.