Can I live in my depreciated rental?

Question from Jo updated on 11th September 2009:

I am currently renting out my house and have been completing tax returns and depreciating things as per recommendations and tax advice (I have been overseas for the past three years with an authorised person completing these tax forms and am not sure things have been depreciated for the past three years, but the three prior have been depreciated). I unfortunately need to give my tenants notice to move in there myself. Are there any tax repercussions? (apart from no longer depreciating and completing a tax form etc for the house as it will no longer be a rental). Jo

Our expert Mark Withers responded:

Moving into a property that has been depreciated triggers a "deemed disposal" of the property. This typically results in the recovery of depreciation that has been claimed. If you don't want to depreciate a property you must make a non-revocable written election to the tax department. Believe it or not but if you haven't elected not to depreciate and simply have failed to depreciate IRD can require you to recover the depreciation you should have claimed!

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.



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