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The ATO has warned tax brokers and accountants to be transparent about what customers can declare with regards to second-hand depreciating property for residential condominium homes. 

It stated generally those property have been both pieces current in a belongings when the customer made the acquisition or have been in a consumer’s non-public place of dwelling that was once later rented out.

This stuff may just come with ground, window coverings, air conditioners, washing machines or even spas. 

Since 1 July 2017 people have now not been ready to assert the decline in worth of second-hand depreciating property except the valuables was once used for proceeding a trade, corresponding to a resort.

The ATO outlined second-hand depreciating property as the ones up to now put in and able to be used or used:

  • By means of any other entity
  • To your non-public place of dwelling
  • For a non-taxable function

The place of business stated that the foundations referring to deductions for the decline of worth for second-hand depreciating property have been to stop a couple of people from claiming deductions at the similar merchandise over its existence.

Some caveats did exist, with newly constructed or considerably renovated homes ready to assert a deduction for a decline in worth of a depreciating asset within the belongings if:

  • Nobody was once up to now entitled to a deduction for the asset.
  • Both nobody resided within the belongings ahead of it was once received or the asset was once put in to be used or used on the belongings and the customer received the valuables inside six months of it being constructed or considerably renovated.

To make a decision at the factor, the ATO stated tax brokers and accountants will have to ask their customers:

  • Used to be it a brand new or current construct?
  • When did you get started renting the valuables out?
  • Did you are living within the belongings ahead of renting it out?
  • Used to be the asset already within the condominium belongings while you purchased it?

To decide the quantity of the deduction for the decline in worth of a depreciating asset, brokers and accountants may just both use the high price or diminishing worth manner.

The diminishing worth manner assumes the decline in worth every yr was once a continuing quantity of the remainder worth and subsequently would scale back to a smaller worth over the years.

The high price manner accepts that the worth of a depreciating asset decreases uniformly over its efficient existence.  

The efficient lifetime of an asset may just both be decided by way of the customer or the Commissioner of Taxation, which problems annually rulings at the factor.

Quiz customers on second-hand condominium write-downs, ATO warns

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Remaining Up to date: 23 August 2022

Revealed: 24 August 2022

Josh Needs

Josh Wishes


Josh Wishes is a journalist at Accountants Day by day and SMSF Adviser, which might be the main assets of information, technique, and academic content material for execs within the accounting and SMSF sectors.

Josh studied journalism on the College of NSW and up to now wrote information, function articles and video opinions for Unsealed 4×4, a consultant offroad motoring web page. Since becoming a member of the Momentum Media Workforce in 2022, Josh has written for Accountants Day by day and SMSF Adviser.

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