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.
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
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.