How do I get chattels valued so I can claim depreciation?

Question from Paul updated on 3rd September 2009:

We are just about to take over our 1st investment property. Could you please explain about getting the chattels valued so we can claim depreciation on these later when we complete our taxes. Is this valuation done by a professional or are we able to do it ourselves?

Our expert Mark Withers responded:

The question of chattel depreciation is one that has altered a number of times over the years as IRD have "clarified" their policies. IRD's position is that if the chattel item is to be depreciated seperately it must be capable of "physical or functional separation from the building". ie it must not be integral to the building. For example, A fridge is a chattel but electrical reticulation is part of the building. You can determine the value of your chattels either by engaging a plant & machinery valuer or you can make your own realistic assessment of the value of your chattels.

If you do it yourself you should keep evidence to determine how you set your values. I'd recommend the services of a professional if there is a sufficiently big list of chattels to justify the cost of the valuation. If you would like to visit our website you can print our "property investment tax questioneer". This contains a list of the chattels that are generally allowed to be seperately depreciated.

TIP... When depreciating chattels you can opt to pool the assets together but when you pool then the whole pool must be depreciated at the lowest rate for any item in the pool. Our policy is to depreciate them individually.

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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