The common investor purchasing a 1950’s post-war cottage would assume that there is little value in obtaining a depreciation report for that property. As described below, this leads to investors missing millions of legitimate tax deductions each year.
Lin and Andrew purchase a post war 1950s home in 2011 for $460,000. Although it does not qualify for deductions for the construction cost of the building (being a pre-1985 house), they can claim the depreciation for the plant and equipment included in the purchase such as the blinds, carpets and stovetops. While Lin and Andrew might think that the plant and equipment in the property should be replaced as a write off, they are missing out on over $10,000 worth of deductions in the first 4 years.
The table below shows example values of plant and equipment in a 1950’s post war home including the mistaken value often attributed to the item by the investor and the real valuation undertaken by Deppro:
|Item||Mistaken value||Value for depreciation purposes|
|Hot Water System||$50||$1,440|