New depreciation legislation for Australian property investors

Investors who purchase brand new residential properties and commercial owners or tenants, who use their property for the purposes of carrying on a business, are also unaffected.Owners of second-hand properties who exchanged after 7:30pm on the 9th of May 2017 will still be able to claim depreciation for plant and equipment assets they purchase and directly incur an expense on.

Property investors – Things to consider when claiming depreciation

Tips to ensure no item is missed and to maximise their depreciation deductions:
1.Take note of the assets included in the above table
2.If you have a depreciation schedule and you own any of these assets, confirm with your Accountant that they are included in your schedule and your depreciation claim. If items have been missed, the Australian Taxation Office will allow you to go back and amend the previous two years of missed deductions
3.If you don’t have a depreciation schedule you should talk to a specialist Quantity Surveyor as soon as possible
4.Ensure your specialist Quantity Surveyor can outline the deductions available for assets which are eligible* to be written off immediately or added to the low-value pool

Proposed changes to Residential Property legislation

Under proposed changes outlined in draft legislation (section 2 of Treasury Laws Amendment Bill 2017), investors who exchange contracts on a second hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on previously used plant and equipment assets. They can claim deductions on plant and equipment items they purchase and directly incur the expense. Investors who purchased prior to this date and those who purchase a brand new property will still be able to claim depreciation as they were previously. Investors should note that these changes are not yet law, as the legislation still needs to be passed through the senate for confirmation

Trend sees home Owners becoming Investors

Significant number of home owners are recognising the additional value of renting out their home rather than selling.The most common reason is usually due to the prospect of long term capital growth along with the opportunity to use equity to finance the next home and avoid selling costs.The Australian Taxation Office requires owners of investment properties to report any income they earn. They also allow owners of income producing properties to claim the expenses associated with the property.

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