A big change to property depreciation legislation has come into effect and unfortunately, property investors are the losers.
This month Parliament passed the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 which means owners of second-hand residential properties (purchased after 7.30pm, May 9, 2017) will be ineligible to claim depreciation on plant and equipment assets, such as air-conditioning units, carpet, curtains and dishwashers.
However, it’s not all bad news with no changes to capital works deductions so property investors can still claim for the structure of a building and fixed assets such as doors, cabinets, windows and toilets.
Who will not be affected?
Property investors who already made a purchase prior to May 9, 2017 can continue to claim depreciation deductions as per before.
Owners of brand new residential properties (regardless of when it was purchased) and commercial property owners who use their property for the purposes of carrying on a business, are also unaffected.
Why the changes?
Concerns have been raised of property investors depreciating plant and equipment assets in excess of their actual value.
The government hopes this new legislation will deliver an integrity measure to address these allegations.
Now it’s more than important than ever to work with a specialist accountant to ensure that all deductions are identified and claimed correctly under the new legislation.
The specialist team at Growth Partners – ITP are experts at tax returns for rental properties and minimising loss through gearing, depreciation and refinancing options.
From evaluating the investment opportunity to calculating return on investment (ROI) over the long term, we understand the legalities and obligations, as well as the reporting requirements of owning or borrowing against rental properties.
Find out more about our income tax services.