Depreciation on second-hand residential property

By Tyron Hyde | 30 Dec 2017
Expert Advice with Tyron Hyde - 30/12/2017

In this month’s QS corner - I look into my crystal ball and predict the future!


Yes, It's now law! Parliament has officially passed the legislation limiting the way investors claim depreciation on second-hand residential property.

Here’s a quick recap of the changes:

You will no longer be able to claim depreciation on any previously used Plant and Equipment assets, like a 2nd hand dishwasher or oven, moving forward.

However, you will still be able to claim on the structure of the building, provided it built after 1987. This typically represents 85% of the construction cost of a residential property.

Whilst there has been some merit in regards to these changes, a more balanced approached would’ve been more suitable.
 
What will this mean for the property market: I believe these changes will create a two-tiered property market in which investors selling near-new property will struggle to compete with those selling brand new property.

Developers should be dancing in the street, as there stock is now that much more appealing to investors.
 
I suspect investors may start looking into commercial and other forms of non-residential property as well as different ownership entity structures as properties purchased under a company name will not be affected.

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Tyron Hyde is the CEO of Washington Brown and is considered one of Australia’s leading experts in property tax depreciation. He is also a registered tax agent.  Washington Brown manages construction costs worth over $2 billion and completes 10,000 schedules annually. For a depreciation schedule quote CLICK HERE and follow the 3 simple steps or estimate your depreciation cost. 
The Washington Brown Free Depreciation Calculator will give you an estimate of the depreciation deductions you could claim on your investment property
 

Read more Expert Advice articles by Tyron
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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