Changes to Depreciation Deductions for Residential Properties

For the first time in more than 15 years, parliament has passed changes to property depreciation legislation in the Housing Tax Integrity Bill 2017. This was initially announced in the 2017 Federal Budget.

Some key points to note are:

• Property investors purchasing used or second-hand residential investment properties after 7.30pm on the 9th May 2017 will not be able to claim depreciation expenses on existing plant and equipment assets. However, any new assets added by the owner will be deductible depreciation expenses.

• No changes to capital works depreciation expenses deductions on the structure of the property, including any fixed assets.

• Property investors who purchased used or second-hand residential investment properties prior to 7.30pm on the 9th May 2017 will not be affected. They continue to be able to claim depreciation expenses on existing plant and equipment assets, including any additions by the owner. Capital works deductions are unchanged.

• Property investors who purchased brand new residential investment properties – regardless of whether they purchased prior or after 7.30pm on the 9th May 2017 – are not affected by the new rules.

• Commercial properties owners are unaffected by the legislation changes.

The above is a general summary of the property depreciation legislation changes only. For further information and advice specific for you and your circumstances, please contact us.