Budget changes to tax depreciation are effective for properties purchased after 9 May 2017. The quick hard facts below make the changes easy to understand.
THE ANNOUNCEMENT
On Budget Night 9th May 2017, the government, in an attempt to “reduce pressure on housing affordability”, has proposed new rules relating to claiming depreciation under Division 40 Plant and Equipment Assets.
Effectively, depreciation on plant and equipment assets for existing properties that were installed by the previous owner can no longer be claimed. These include white goods, hot water units, floor boards etc.
THE POSITIVES
- These changes will not affect how investors claim depreciation on new property!
- New plant and equipment assets added after the purchase date on existing residential property can still be depreciated. (Commercial property excluded)
GRANDFATHERING
Properties purchased before 9 May 2017 will not be affected by the announced changes to tax depreciation. Investors can continue to claim Division 40 assets installed prior to the purchase date on existing property.
REPORTS & INSPECTIONS
For property purchased after 9 May 2017:
- Reports will no longer include a split of Division 40 assets
- Total depreciation deductions will be based on the historical cost of construction plus renovations and improvements prior to purchase
- Post-purchase Division 40 assets will continue to be included
- Our inspection process will remain unchanged in order to identify Division 40 and Division 43 Capital Works and Improvements necessary to arrive at the full historical construction value to maximise tax depreciation
WHAT ADM QUALITY SURVEYORS CAN DO TO HELP YOU
With these new proposed changes in mind, if you have purchased an existing property prior to budget night, make sure to have a schedule prepared now so that you can maximise your deductions for the last financial year.
Thank you to Liam Hannah from ADM Quality Surveyors for the updated information.
If you have any questions regarding the changes or need assistance with preparing your depreciation schedule, please contact them on;
1300 133 123
or visit their website:
