The contentious issue around how depreciation of residential rental property items has resurfaced in a very low key manner.
Inland Revenue released a discussion document last year outlining its latest views on how investors should treat depreciation.
Although a press release was put out in November very few people were aware of either its existence or the dicussion document.
When IRD raised this issue three years ago there was signifcant opposition to the proposed changes.
The IRD acknowledges its "Residential Rental Properties - Depreciation of items of depreciable property" had previously been released for comment and, "in response to earlier submissions, has been amended and released again for further public consultation".
The IRD set a December 18 date for submissions, however it is unclear how many submissions were made as many investors were unaware of the document.
According to IRD, "the most significant change is the development of a three-step test that will be applied to determine whether an item should be treated separately or as part of the building".
That is, investors need to determine whether an item is:
Its draft statement also includes an appendix with common items, such as plumbing, electrical wiring, hot water cylinders, doors, and cupboards, and states whether these are viewed as separately depreciable items or part of the building.
Source: Landlords.co.nzcomments powered by Disqus