Question from Anna updated on 3rd October 2014:
I shifted back into my property in December 2013 after renting it out for three years. I have claimed depreciation on three chattels using the diminishing value method. These chattels have a very low value now (they were not big items). Do I continue the method I used previously and claim depreciation on these? Or do I use the closing value of the chattels as an expense? Is there anything else I need to be mindful of for tax purposes now that I have moved back into the property?
Our expert Mark Withers responded:
When you move back into a property and effectively remove it from the tax base, a deemed disposal of the asset is triggered on the first day of the next income year. So if the market value of the chattel items exceeds the depreciated book value a recovery of depreciation must be returned in the next income year. No further depreciation deductions can be claimed in the year of disposal.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.