New depreciation rules proposed for residential property investors

The Federal Government has proposed adjustments to depreciation legislation in the 2017 Budget.

Under the new rules which are yet to be legislated by Parliament, investors will be able to depreciate new plant and equipment assets within a new property and items they add to their property; however subsequent owners who acquire a property after 9th of May 2017 will not be able to claim depreciation on existing plant and equipment assets.

Investors will still be able to claim qualifying capital works deductions, including any additional capital works carried out by themselves or a previous owner. Commercial, industrial and other non-residential properties are not affected.

The budget notes were clear that existing investments will be grandfathered. This means that anyone who purchased (exchanged contracts) a property prior to 7.30pm on 9th of May 2017 will be able to claim depreciation as per current process.

From 1 July 2017, the government plans to “improve the integrity of negative gearing” by disallowing deductions for travel expenses. .

If you fall under this category, you can still claim depreciation on plant and equipment assets for both new and second-hand properties.

We are currently speaking with government to further understand the intricacies relating to the budget notes and the proposed changes to depreciation of plant and equipment assets.

Article originally provided by BMT Tax Depreciation

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