Determining life expectancy of a building

Question from Robert updated on 22nd February 2011:

How would the IRD view older residential properties and the new ruling re: depreciation with a building life expectancy in excess of 50 years? Who would be responsible for determining the life expectancy of a residential building, or is there some agreed criteria or table based on the age of a residential property. Thanks!

Our expert Mark Withers responded:

The types of commercial and residential buildings that investors are typically interested in are deemed to have a useful economic life of 50 years. There are a few limited examples of buildings with deemed uselful lives of less than this eg some farm buildings. There is really no opportunity short of making a specific application to IRD in support of a particular type of building but it seems unlikely IRD will grant the right to depreciate. Remember that residential chattels and commercial building fitouts can still be depreciated subject to some eligibility tests. 

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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