If you’re a regular reader of QS Corner, you probably know by now you can’t claim the building depreciation allowance on your property unless the construction commenced after July 1985.
What you might not know, however, is that in order to claim the depreciation of the work external to the main residence, construction must have commenced after 26 February 1992.
Work that is external to the building is defined by the Tax Office as Structural Improvements.
Some examples of Structural Improvements include:
a. Sealed roads, driveway and car parks
b. Retaining walls
d. Swimming pools
Earthworks associated with the actual Structural Improvement, such as excavating the pool, can also be included.
The cost of constructing the Structural Improvements can be depreciated at 2.5% per annum.
These costs can be substantial, so it may be worth remembering this little known fact next time you buy a property built in the late 1980s or early 1990s!
Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit www.washingtonbrown.com.au
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.