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  1. #1

    Default Depreciation question?

    Hi Guys

    I have made major Improvement to my rental bathroom recently.

    Including new floor, walls, ceiling, window, shower, vanity, heater and fan.
    The labour includes, flooring, painting, plumbing and builder.

    Any of these depreciable ?

  2. #2
    Join Date
    Oct 2013
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    1,638

    Default

    Yes, some of those are depreciable. Some may also be immediately deductible as repairs and maintenance. Others will be entirely non-deductible, as they're considered part of the building.

    For an exact blow-by-blow answer you'll need to contact your tax adviser.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
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    [email protected] for more information.

  3. #3
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,635

    Default

    The answer like so often is it depends. You haven't given enough information to give a definite answer about it.

    As above it is best to get specific advice from a property accountant.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  4. #4

    Default

    In general – improvements need to be capitalized (answer is NO) , repairs are rent-deductible and only chattels can be depreciated.
    Chattel depreciation guide see IR260

  5. #5
    Join Date
    May 2008
    Posts
    3,652

    Default

    Quote Originally Posted by sole View Post
    I have made major Improvement to my rental bathroom recently.

    Including new floor, walls, ceiling, window, shower, vanity, heater and fan.
    The labour includes, flooring, painting, plumbing and builder.

    Any of these depreciable ?
    Probably not if you said this to your accountant.
    But if you said "I have replaced/repaired my old broken down bathroom with similar items" you might get most of it as a deductible expense.

  6. #6
    Join Date
    May 2004
    Posts
    2,841

    Default

    A good idea to get the tradies to specify on the invoices, for example, removed and disposed of cracked shower tray and shower door with failing seals. Only if the case of course. Photos also worth taking and suggest keep them in a folder in the cloud.

  7. #7

    Default

    Quote Originally Posted by Bob Kane View Post
    Probably not if you said this to your accountant.
    But if you said "I have replaced/repaired my old broken down bathroom with similar items" you might get most of it as a deductible expense.
    The question relates to depreciation not rent deductible repairs. Yes, you can write off an depreciated item and replace it with a new depreciation value.

    The IRD released an updated list of residential rental property chattels that can be depreciated in November 2011, The IRD’s interpretation statement is the tax law by applying an 3 step test. Asking for a different view might cost you battle with the IRD if your accountant takes a different stance.

  8. #8

    Default

    My accountant summed up the IRD stance brilliantly - is the house going to still function as a house if you take that item away? Walls, floors, plumbing, wiring, showers etc aren't depreciable.

    Here is the list. I think your heater and fan are depreciable and that's all. You depreciate the cost of the item + the cost of installing that specific item, get an itemised invoice from your builder or sparky.

    At the same time, replacement or repair is different and might be maintenance. It depends on age of building. If you had a chattels valuation beforehand the value of items disposed of may be claimable. Check with your accountant (who hopefully is up to speed on property things).

    http://www.ird.govt.nz/technical-tax...ter-dep80.html
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  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,635

    Default

    My guess would be nothing is depreciable in the list. But this is a guess, because I don't have enough detail.

    As others have stated, you haven't asked what is claimable as a repair which is probably the best question. But again there can be cases where none of this is deductible as repairs. It all depends on the facts.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  10. #10

    Default

    Quote Originally Posted by Nick G View Post
    My accountant summed up the IRD stance brilliantly - is the house going to still function as a house if you take that item away? Walls, floors, plumbing, wiring, showers etc aren't depreciable.

    Here is the list. I think your heater and fan are depreciable and that's all. You depreciate the cost of the item + the cost of installing that specific item, get an itemised invoice from your builder or sparky.

    At the same time, replacement or repair is different and might be maintenance. It depends on age of building. If you had a chattels valuation beforehand the value of items disposed of may be claimable. Check with your accountant (who hopefully is up to speed on property things).

    http://www.ird.govt.nz/technical-tax...ter-dep80.html

    The vast majority of accountants are not up to speed on this, i have checked out quite a few . My last accountant was hopelessly out of touch on the whole subject of depreciation and making many mistakes so i switched to Tony Thorne who is on the ball with this and pleased with the results:

    THORNE ACCOUNTING
    Expert Property Accountants

    Ph (09) 571 0491

    Fax (09) 929 3269

    642 Great South Road, Ellerslie, Auckland 1051

    PO Box 11264, Ellerslie, Auckland 1542

    Email [email protected]
    Web www.thorneaccounting.co.nz


 

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