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26 November 2008

Building Allowance & Depreciation - which is which?

The following advice from TDS (Tax Depreciation Specialists):

Deductions for income-producing properties are divided into two types - Building Allowance and Depreciation: 

The “building allowance” is applicable to properties, renovations or improvements constructed after 18th July 1985. Generally, it is 2.5% for 40 years. Some buildings attract 4% ie: Built between 17/7/85 and 14/9/87. External structural improvements made after 26th February 1992, such as driveways, fencing and retaining walls can also be claimed. The Building Allowance is also often referred to as „capital works deductions‟.

Depreciation can be worked out using two methods - the Prime Cost Method and the Diminishing Value Method. Using the Diminishing Value Method items under $300 are 100% deductible and items between $300 and $1,000 are depreciable at 37.5% over a full financial year (this is called the “Low Value Pool”). Items over $1,000 are depreciable at their applicable rates eg carpet at 10% (prime cost rate) x 150% (ie 15%) where settlement date was prior to 10th May 2006 or x 200% (ie 20%) if it was after this date. Using the Prime Cost Method items under $300 are 100% deductible and all items over $300 are depreciable at their applicable rates.

For more information, call TDS on 1300 559 815 or visit

Yours in property!

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