SearchChattel depreciation
Anna asks:
(updated on Friday, October 03rd 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 Experts Answer:
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.
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