Increased asset write-off likely out of investors' reach

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One of the most talked about aspects of this year’s Federal Budget was the increase of the instant asset write-off available to small businesses. 

Under the changes, businesses with an annual turnover of less than $2 million would be able to write off any asset purchased worth up to $20,000. 

While the increase is quite significant jump from the previous instant asset write-off cap of $1000, it’s only temporary and expires in 2017. 

With the $20,000 write-off only available for a small period, some investors may be wondering if they could take advantage of it and apply it to costs relating to investment properties. 

Unfortunately for most investors, David Shaw, chief executive officer of accountancy firm WSC Group, believes the write-off would only be available to those who can show they spend a significant amount of time and effort managing their properties. 

“A property investor doesn’t generally meet the criteria to be deemed as a small business,” Shaw said. 

“A passive investor with a couple of investments isn’t probably going to qualify, but somebody with a large number of properties who is looking after the majority of the management needs and is spending a large amount of time doing so might.”

Shaw also said investors should be careful what assets they apply the write-off to if they think they’re eligible. 

“If you are looking after the properties yourself and you need a car to drive around to them all that is something that may qualify, but renovations or items bought for a property would be classed in your normal property deductions.”

If the lure of the write-off is too hard to ignore, Shaw recommends investors should play it safe. 

“Like any tax issue if you’re looking at it and you’re unsure the safest thing to do is to be careful and get some advice from a professional.”

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