News

Change to tax rules for investors

On the 9th March 2017 the Federal Governement announced changes to the rules for residential property investors when it comes to claiming for 'plant and equipment'.  To clarify, 'plant and equipment' is basically the easily removable or mechanical fixtures and fittings in the property.  Think window treatments, dishwashers, cookers, light fittings etc. 

The changes outlined in the draft legislation (section 2 of Treasury Laws Amendment - Housing Tax Integrity Bill 2017) remove a subsequent owner's ability to claim a depreciation deduction for previously used plant and equipment assets for properties that exchanged contracts AFTER the 9th May 2017. 

So what does this mean?  Basically, if you own an investment property prior to the 9th May 2017, you are unaffected and can continue to claim depreciation for these items.

If you purchased a residential investment property and exchanged your contract AFTER the 9th May, AND the house has been pre-owned (not a new build) you can not claim a depreciation deduction for pre owned 'plant and equipment' items.  

The good news is that Investors can still continue to claim the 'capital works' component (deductions for wear and tear of the building structure and fixed items).  This is is the larger portion of a depreciation schedule (in most cases!).  This includes improvements, renovations, & initial repairs. 

Can I claim depreciation if I have to REPLACE a 'plant and equipment' item?

Yes!  In the event you are replacing an entire unit (i.e. the oven breaks down and requires replacing, or the airconditioner breaks down and requires replacing) you can claim depreciation of these items.

We hope all our clients who have an investment property have a depreciation schedule.  It can literally be the difference of thousands of dollars of claimable items at tax time.  If you are unsure it there is benefit to you - contact BMT for a free consultation on 1300 728 726, or check out their website.