In this month’s QS Corner we look at the 6 key takeaways from the Govt’s recent changes to depreciation.
At the time of writing, the Legislation changing the way investment property is depreciated has just been finalised.
The 6 must-know takeaways from these changes:
1 For residential property, you will only be able to claim depreciation on plant and equipment items (ovens, dishwashers etc.) when you buy a brand new property.
2. You will still be able to claim the building allowance (bricks, concrete etc.) on any residential property built after 1987.
3. If you bought a property built prior to The Budget on the 9th of May, 2017 when the changes were announced, you are not affected in the slightest.
4. There is no change at all to commercial, or other non-residential property.
5. If you personally buy any item for your property after the settlement you can still claim the depreciation on that particular item.
6. Perhaps the most interesting point: Whilst investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property, by claiming any unclaimed depreciation as a capital loss.
Moving forward, property investors will have a choice of ordering a building allowance report only, a CGT schedule or a combination (most popular), from Washington Brown.
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.