Definitive List of Depreciable Chattels
As you should be aware by now, depreciation can no longer be claimed on buildings from 1 April 2011. However, depreciation can still be claimed on chattels.
The IRD released an interpretation statement in December 2009 that outlined what the IRD considered to be a chattel and what they considered to form part of the building. While the IRD's interpretation statement is simply their take on the tax law, I think you'd be asking for a costly legal battle with the IRD if you decided to take a differing stance.
The IRD's interpretation is that only an item that is distinct from the building can be classified as a chattel and depreciated. To determine whether or not an item is part of or separate from the building, the IRD said that the following tests should be applied:
- If the item is not attached to the building, then it can be depreciated separately.
- If the item is integral or firmly attached to the building, then it is part of the building so cannot be depreciated.
To further clarify the items that the IRD consider to be chattels, they released an updated list of residential rental property chattels in November 2011. There are the items that the IRD consider to be depreciable chattels:
Air conditioners (through wall type)
Air ventilation systems (in roof capacity)
Alarms (wired or wireless)
Heaters (gas, portable & not flued)
Heat pumps (through wall type)
Light shades (excl the light fitting)
Satellite receiving dishes
Utensils (incl pots and pans)
Waste disposal units
Water heaters (over sink type)
Water heater (hot water cylinder)
Water heater (solar)
This list applies from 1 April 2011 and will provide a lot of clarity in future. For existing clients, you can download our full chattels guide from the client login at the top right of the website.
Disclaimer: The above article is general in nature and we recommend you seek professional advice tailored to your specific personal situation.