Should I supply a buyer with my depreciation schedule? Ask Margaret

Hi Margaret,

I have my rental unit for sale and the real estate agent says a buyer is requesting a copy of my depreciation schedule. Should I supply this as it contains the purchase price?

Regards,

David

There is no reason to provide this depreciation schedule at all, since a depreciation schedule is prepared for a person, not for a rental property per se. 

The new buyer will not be able to use this schedule for their own claims and must have one of their own prepared. This is because their acquisition date is different than yours and the plant and equipment will be dealt with differently for them than it was for you. 

Essentially, the plant and equipment will get a ‘new effective life’ in consideration for the fact that it was not new when they bought the property from you.

Having said that, you can provide, for their information only, the amounts which have been listed therein, as this does not give away your original purchase price at all. 

Depreciation is divided into two main parts – that for the building and that for the plant and equipment.  Neither relate to what you paid for that property.  It’s possible that this information might provide a good guide to the buyer as to what they can expect, but it should be provided with a disclaimer that this is not provided as part of any tax advice, or even an expectation of what the new owner can achieve.

You should also advise them they must have their own report prepared. 

I’d put this in writing if you do decide to go ahead and provide this information, as you would not want the buyer to come back at you later claiming they only bought it on the basis of your advice about how much tax they could claim.   

Regards,

Margaret

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