We have some important news (albeit slightly boring… bear with us).
This year’s federal budget saw amendments proposed regarding plant and equipment deductions in residential property investments. As at 15th November 2017, the legislation has been passed and all proposed changes are now in full effect.
That means if you’re a property investor, you need to know what you now can and can’t claim.
In a nutshell, the new legislation prevents investors from claiming deductions on depreciating assets that have been previously used. ‘Previously used’ means they were part of the property before you owned it; i.e. you are buying second-hand residential property. i.e. if you buy a brand new property or off the plan, this won’t affect you.
Why has the government done this? They were concerned that certain assets, namely plant and equipment, were being depreciated in excess of their value. To clarify, plant and equipment assets are mechanical items or those that are easily removable such as blinds, air conditioning and smoke alarms.
Who is affected?
As in investor, you can no longer claim a tax deduction on these assets if you have purchased a second-hand residential property and the assets were purchased by the previous owner before 9th May 2017. You’ll remain unaffected if you have:
- Acquired an investment property after this date but purchase new assets,
- Purchased the property before this date, or
- Are buying brand new property.
To learn about these changes in more detail, we recommend you read BMT’s white paper on the essential facts on the 2017 budget and depreciation changes.
Most property owners and investors miss out on hundreds or thousands of dollars’ worth of deductions, so it’s important to seek help from a quantity surveyor and talk to your trusted property advisor.
For further information on this, you can get in touch with us here.