IMPORTANT – “SALE/PURCHASE PRICE ALLOCATION”
From 1 July 2021, a vendor and purchaser may need to include an allocation between LAND (Non-depreciable Property) and IMPROVEMENTS (Depreciable Property) within the sale and purchase agreement.
Depreciation rules are always changing and this rule requires you to agree to additional information within the Sale and Purchase Agreement. In its simplest form you will be required to agree on the allocation between LAND (non-depreciable property) and IMPROVEMENTS (Depreciable Property) within the agreement. The allocation will be used to determine the “closing book value” of improvements for the vendor and the corresponding “opening book value” of improvements for the purchaser.
STAY TUNED – MORE DETAIL TO COME
NOTE: this is an overview of the changes ONLY. Please take direction on the specifics in relation to the eligability and specific rules in relation to your property from your Accountant.
The calculator below utilises the IRD formula to calulate the ALLOCATION between “LAND” and “DEPRECIABLE PROPERTY”.