Depreciation clawback on cashing in

Question from lorraine updated on 23rd January 2014:

I have two properties that I have had for over ten years. I am approaching retirement and wish to put the money into a portfolio with my bank. Will the Inland Revenue Department have any claim/clawback for depreciation that I have claimed in the past on the properties? I bought one property in 2000 and the other in 2001... I look forward to your advice.

Our expert Mark Withers responded:

Dear Loraine, there is no time limit on the recovery of depreciation. This is a common misconception stemming from confusion with the 10-year time requirement that exists for those involved in property development and trading who also own investment properties. If you sell your buildings for a price in excess of their book value then depreciation recovery will be triggered regardless of how long you have owned them.

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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