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Depreciation treatment when converting off-the-plan owner occupied home to rental property?

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With respect to the information on this ATO webpage: https://www.ato.gov.au/Individuals/myTax/2018/In-detail/Rent/?page=18

 

Suppose a brand new off-the-plan residential apartment is purchased and owner occupied for 6 months, with the owner qualifying for First Home Buyer's Assistance and the First Home Owner's Grant - 

 

If the owner occupier later decided to move out and rent out the property some time after 6 months, would he/she be able to claim depreciation expenses on the apartment and fit-out/appliances as tax deductions, seeing as (1) no one was previously entitled to a deduction for the assets and (2) no one resided in the property before it was acquired?

 

Also, just to confirm, am I correct in saying mortgage interest/strata expenses etc. would be claimable as deductions as soon as the property starts generating income?

 

Thankyou in advance,

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Hi @Barney 

 

Thank you for contacting ATO Community.

You generally can't deduct spending on capital assets immediately; instead you claim the cost over time, reflecting the asset's depreciation (or decline in value).

This applies if you use depreciating assets to earn assessable income, including:

  • small and large businesses
  • rental property investors
  • employees (for equipment and tools they provide at their own expense for use in their work).

A depreciating asset is one that has a limited effective life and can reasonably be expected to decline in value over the time it's used.

For mor information on depreciating assessts, you can go to :

 

You can also see Depreciation and capital expenses and allowances on our website that may have information to assist you.

 

I really hope this information helps you.

 

MariR

 

 

1 REPLY 1

Most helpful response

Community Support

Replies 0

Hi @Barney 

 

Thank you for contacting ATO Community.

You generally can't deduct spending on capital assets immediately; instead you claim the cost over time, reflecting the asset's depreciation (or decline in value).

This applies if you use depreciating assets to earn assessable income, including:

  • small and large businesses
  • rental property investors
  • employees (for equipment and tools they provide at their own expense for use in their work).

A depreciating asset is one that has a limited effective life and can reasonably be expected to decline in value over the time it's used.

For mor information on depreciating assessts, you can go to :

 

You can also see Depreciation and capital expenses and allowances on our website that may have information to assist you.

 

I really hope this information helps you.

 

MariR