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  1. #1
    Join Date
    Mar 2015
    Location
    Brisbane Wellington Auckland
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    775

    Default Did not claim depreciation on property

    I have a friend who's accountant has not claimed depreciation on his commercial and residential properties
    It has now been 4 years so 3 years have been filed
    Question
    1 can you now start depreciation?
    2 can you backdate ?
    3 can amend earlier returns ?
    Not a large portfolio $3m but still worth claiming I believe

  2. #2
    Join Date
    Oct 2013
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    1,609

    Default

    1. Nope, sorry! By not depreciating in the first return, those assets have been elected non-depreciating for their lifetime with the entity.
    2. Nope, sorry!
    3. Nope, unless there's a 'genuine error'. This is unlikely to apply simply due to bad advice or bad decision not to depreciate.

    There's a view that one could restructure, selling everything to a new entity which might then be able to elect to depreciate from the date of purchase, but it's a little on the shady side. If the restructure were completed with a primary purpose of reducing tax, that's possibly able to be deemed as avoidance by the IRD.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  3. #3
    Join Date
    Mar 2007
    Posts
    118

    Default

    How much would the depreciation be considering land is not depreciated and building/chattels are depreciated at about 2% (?).

  4. #4
    Join Date
    Oct 2013
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    Quote Originally Posted by King13 View Post
    How much would the depreciation be considering land is not depreciated and building/chattels are depreciated at about 2% (?).
    Most chattel are depreciated at 5-30%, with some as high as 67%. It can be big numbers.

    And given its Beano asking, this is probably commercial, so a vast swathe of items not available for residential depreciation are possible.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  5. #5

    Default

    Quote Originally Posted by Beano View Post
    I have a friend who's accountant has not claimed depreciation on his commercial and residential properties
    It has now been 4 years so 3 years have been filed
    Question
    1 can you now start depreciation?
    2 can you backdate ?
    3 can amend earlier returns ?
    Not a large portfolio $3m but still worth claiming I believe
    I had the same broken record deal with my previous accountant even when i provided him with chattels valuation properties he was quite in the dark about it and reluctant to understand that chattels depreciation is still able to be claimed on many items as long as they are identified separately and pass the IRD 3 step test. As Anthony above stated backdating is probably not an option.

    Tony Thorne is excellent with regard to understanding the chattels depreciation and all things property related , i highly recommend him, even though he's based in Auckland , this is no barrier for anyone outside that area with digital communications, his contact details are :


    THORNE ACCOUNTING

    Ph (09) 571 0491

    Fax (09) 929 3019

    642 Great South Road, Ellerslie, Auckland 1051

    PO Box 11264, Ellerslie, Auckland 1542

    Email [email protected]

    Web www.thorneaccounting.co.nz
    Last edited by mrsaneperson; 08-07-2018 at 02:06 PM.

  6. #6
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,581

    Default

    Quote Originally Posted by Beano View Post
    I have a friend who's accountant has not claimed depreciation on his commercial and residential properties
    It has now been 4 years so 3 years have been filed
    Question
    1 can you now start depreciation?
    2 can you backdate ?
    3 can amend earlier returns ?
    Not a large portfolio $3m but still worth claiming I believe
    Hi Beano,

    Do the properties have many chattels? In some cases if the chattels are worth very small amounts, then it might not be worth getting a Valuit chattels valuation done.

    If this is not the case, I would get your friend to ask their accountant, "why wasn't a chattels valuation and depreciation suggested?" - and see what comes back.

    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.

  7. #7
    Join Date
    Mar 2015
    Location
    Brisbane Wellington Auckland
    Posts
    775

    Default

    Quote Originally Posted by Rosco View Post
    Hi Beano,

    Do the properties have many chattels? In some cases if the chattels are worth very small amounts, then it might not be worth getting a Valuit chattels valuation done.

    If this is not the case, I would get your friend to ask their accountant, "why wasn't a chattels valuation and depreciation suggested?" - and see what comes back.

    Ross
    I am not sure but on our catchup later this week I am going to suggest he calls you directly as his current accountant is clearly not switched on

  8. #8

    Default

    Quote Originally Posted by Rosco View Post
    Hi Beano,

    Do the properties have many chattels? In some cases if the chattels are worth very small amounts, then it might not be worth getting a Valuit chattels valuation done.

    If this is not the case, I would get your friend to ask their accountant, "why wasn't a chattels valuation and depreciation suggested?" - and see what comes back.

    Ross
    Few properties would not be worth doing a Valuit chattels report on. The report includes fencing, hot water cylinder, oven , certain types of detachable decking and a host of other things.

  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,581

    Default

    Quote Originally Posted by mrsaneperson View Post
    Few properties would not be worth doing a Valuit chattels report on. The report includes fencing, hot water cylinder, oven , certain types of detachable decking and a host of other things.
    For very cheap ones it isn't always worth it. ie a $100k property probably wouldn't be worth it (don't ask me where a $100k property is in nz.

    Or if you were going to rip out all the chattels and add new ones straight away

    Or if you were on a very low income(so low tax rate), or had huge losses to use up!

    There can be reasons why a chattels valuation is not done!

    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.


 

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