In this month’s QS Corner - there is a sting in the tail!
When the Government changed the rules regarding depreciation in May 2017, they left a sting in the tail for property investors.
You probably know that if you buy a second-hand residential property after May 10, 2017 that contains “previously used” depreciating assets, you will no longer be able to claim depreciation on those assets. Depreciating assets, in this case, refers to things like ovens, dishwashers, blinds, etc.
The changes were grandfathered, meaning if you bought the asset prior to the change you weren’t affected. Well, kind of.
Here’s the sting in the tail - let’s say you bought the property prior to the changes in the law and you were living in it at the time and now decide to move out. Well, in the old days you would’ve been able to depreciate the assets moving forward.
Nowadays, even though the assets were acquired prior to the law change, the tax office will deem those assets as being “previously used” and thus no longer claimable.
That’s the bad news, the good news is that this doesn’t affect the building allowance, which represents 85% of the construction cost, as it only applies to loose items like ovens etc.
So in 98% of cases, it still makes sense to get a depreciation schedule.
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.