Most property investors know that there were changes to depreciation announced in the May 9 Federal Budget. The draft legislation was released recently and cleared up some confusion, but also contained some good news:

  1. The changes do NOT affect commercial property. 
  2. The changes do NOT affect brand new residential property.
  3. The changes do NOT affect property purchased before May 9, 2017.

The changes do NOT affect deductions claimed on the building itself. 

So what is affected?

With second-hand properties purchased (exchange of contracts) after May 9, 2017, you will no longer be able to claim depreciation on the Assets: appliances, floor coverings, air con, hot water etc. (But in many cases, there is still plenty to claim on the building itself.)

Any Assets you buy and add yourself to the property, you will of course be able to claim.

With these second hand properties, the depreciation you could have claimed on the Assets under the old rules can be tallied up and deducted from the profit when you sell the property. This reduces your Capital Gains Tax!

Talk to our tax experts at Tax Focus to ensure you fully understand the impact on your investment property the latest rules have and how to plan it in your favour!

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