Changes to Residential Tax Depreciation following the 2017 Federal Budget
Posted on July 4th, 2017
In their wisdom the government is trying to do their bit for housing affordability. I am not going to even try and discuss how making investment property less attractive to investors will increase affordability…
The main change:
- An item of Plant (Division 40) must have been actually purchased by the investor to be claimed in a Depreciation Schedule
- It follows then that second hand homes will have NO plant claim available, only Capital, if purchased after 9 May 2017
Anyway, the good news:
- Commercial properties, Industrial properties, Short Term Traveller Accommodation (Motels) etc. are NOT affected by these changes.
- Residential properties purchased prior to 9 May 2017 (Budget day) are NOT affected by these changes
- The Capital Allowance (Division 43) is NOT affected by these changes. This is the “bricks and mortar – the structure of the house” As Capital on a newer property makes up a great proportion of the total depreciation claim, this is still a very valid reason to have a report prepared by a qualified Quantity Surveyor.
- Whilst we do not yet have a 100% decision, it appears that brand new residential properties purchased after 9 May 2017 will be NOT affected by these changes.
- If you renovate an older property and install new items of Plant, you can still claim these as you have actually purchased them.
So in summary, A Tax Depreciation Report will still be of significant benefit to most investors, however the amount of the benefit may be reduced.
A Tax Depreciation Report is still a 100% deductable, one-off, expense and is generally recouped in the first few months of depreciation benefits available.
Neil Richardson has been preparing depreciation schedules for over 20 years and inspects every property himself. No middle-man. No sending data off-site for preparation. Contact Neil with any queries regarding how a Tax Depreciation Report may be of benefit.