What property value do I have to use for LAQC depreciation purposes?

Question from Lyndon Lattimore updated on 21st August 2008:

I have a couple of rental properties which are held in my own name and I am looking at putting them into an LAQC. My question is what property value do I have to use for LAQC depreciation purposes? I have got a Registered Valuation but due to the Associated Persons test do I still have to use the original cost price when bought in my own name 2 years ago or can I use the new valuation?

Our expert responded:

Unfortunately, you are correct. In order to transfer the properties into the LAQC, you must use the market value and the market value must be determined by an independent person, as you have done. However, the amount of depreciation that can be claimed in the LAQC is limited to whatever you claimed previously when the property was owned in your personal name. This also means that you cannot use a chattel valuation in the LAQC if you did not use a chattel valuation when it was in your personal name.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth.  She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.


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