The two main benefits of having a specialised Valuit apportionment are

• Maximise Depreciation
• Minimise Depreciation Recovery

By splitting the purchase price of your investment property into the various depreciation categories set by IRD you will increase your depreciation claim.

Many investors claim nominal depreciation based on the value of chattels assessed by a Registered Land & Buildings Valuer. This value is assessed for Finance purposes, and will not maximise the depreciation claimable by Property Investors. There are three main asset classes that should be included in an apportionment report for depreciation. These assets classes are:

LAND
Non depreciable

BUILDING STRUCTURE
Not depreciable as from 1 April 2011

CHATTELS & BUILDING FITOUT
Depreciable at:
8% - 60% for all dwellings

Chattels is the first category for depreciation of Residential Rental Properties. This includes assets such as:

Carpets

Blinds

Stove

Light fittings

Building Fit-out is the second category for depreciation of Residential Rental Properties. This includes assets such as:

Air conditioning units

Handrails

Fences

These assets are a small sample of the various assets that can be separated from the building structure for depreciation purposes. By applying the correct depreciation rates as specified by IRD we can maximise your depreciation clam and therefore your cash flow.

An IRD Interpretation Statement was released in May 2010 now deems some items of fitout such as Electrical and Plumbing to be part of the Building Structure

DO IT RIGHT

IRD does regularly carry out investigations into rental properties, this includes depreciation claimed. It is essential that You, Your Accountant or Valuer, are able to fully explain the methodology used or why certain assets have been included, and the values placed on each asset. Penalties will be imposed if the information in your return cannot be substantiated.

We strongly advise that you take direction on this matter from a specialist property accountant prior to submitting your tax return.

• Maximise Depreciation
• Minimise Depreciation Recovery

Some investors will not claim depreciation on their Rental Property due to the possibility of depreciation recovery. This can occur when you sell the property for a profit, which as investors we all hope for.

The same specialised Valuit apportionment can also provide relief when selling the property by minimising any depreciation recovery. Please ask how.

DO IT RIGHT

IRD does regularly carry out investigations into rental properties, this includes depreciation claimed. It is essential that You, Your Accountant or Valuer, are able to fully explain the methodology used or why certain assets have been included, and the values placed on each asset. Penalties will be imposed if the information in your return cannot be substantiated..