May
14
If i build a new house and rent it out as an investment, do i have to itemise eveything in the house as a depreciable deduction one by one, for example all of the internal fixings like flooring and lights and cupboards etc and the empty construction "house" or can i just use the complete construction cost and depreciate that as a deduction not including non claimable costls like land and conveyancing… etc
i have read up on the ATO webiste but they are very vague on the requirements for new homes built for investment purposes.
AUSTRALIA, AUSTRALIA
Are you thinking about selling your home yourself? then
Hi Ray, hmm, hours of fun for you
This is complex territory and you want to consult with a tax adviser with expertise in property, and a quantity surveyor to prepare your depreciation schedules, to get everything set up properly now so you don’t fall into any expensive tax traps later, especially when you sell or bear the pain of an ATO audit of your mistakes.
You’re thinking about Division 43 Capital Works deductions, which is just for the construction expenditure. This tax ruling will be helpful:
http://law.ato.gov.au/atolaw/view.htm?locid='TXR/TR9725/NAT/ATO'&PiT=99991231235958
See here for what is included in construction expenditure under section 43-70:
http://law.ato.gov.au/atolaw/view.htm?locid='PAC/19970038/43-70'#43-70
Here’s the The Australian Institute of Quantity Surveyors:
http://www.aiqs.com.au/
Good luck
Edit – the links I posted here didn’t seem to work… just email me for them if you like
Are you in the US or the UK? If you’re British, sorry I can’t help. In the US you do not have to itemize every fixture. Some people choose to do that to take advantage of different depreciation rules.
Please discuss with your tax advisor.
My invest props weren’t new construction but I believe you would take the appraised value for the home and depreciate that. Other costs such as advertising, maintenance, repairs, interest, taxes, mileage you can all write off maybe more. Being a new home I am not sure what you consider maintenance and or repair vs the construction. I would recommend going to a tax pro that has experience with this.
Edit I just noticed your update, I am in the US.