June Saver: Claim Depreciation Before July 2017
Announcement posted by Chan & Naylor 13 Jun 2017
It is important for property investors to know the many tools available to maximise their return on investment. One common tool which is missed in more than 60% of Australian tax returns from residential property investors is tax deductions from depreciation.
Most Australians are not aware of the non-cash deduction which they are entitled to claim. They do not even have to spend their own money to claim this tax deduction from their property's wear and tear unlike council rates or interest on a home loan.
People also think they cannot claim depreciation on older properties. This is a misconception. Most Australian investors consult a quantity surveyor to claim depreciation on older properties built from 1960 to 1980. There are thousands in deductions for these investors from what they think was a worthless property.
New depreciation deduction rules
The government has announced adjustments to depreciation legislation in the 2017 Federal Budget.
Under the new rules, investors can only claim depreciation on new plant and equipment assets in a new property and any fixtures they add to it. Subsequent owners who purchase an established property after 9 May 2017 will no longer be able to claim depreciation on existing plant and equipment assets.
Investors can still claim qualifying capital works deductions such as any extra capital works made by themselves or the previous owner.
According to the Budget, existing investments will be grandfathered so those who have purchased a property before 9 May 2017 can still claim depreciation under the current rule.
If you fall under this category, you can still claim depreciation on plant and equipment assets whether your property is brand new or second-hand. The new rule will be effective starting 1 July 2017.
PS.
Property investors may only claim depreciation on fans, dishwashers and other items they have purchased themselves upon buying a brand new property. Previously, those who purchased established properties may claim depreciation on the aforementioned fixtures.
For more information about property investments and taxes in Australia, contact a Specialist to discuss your particular circumstances.
For more tips and advice from other industry experts, visit www.chan-naylor.com.au