Investment Property Owners – Updates you need to know!

While other political issues were holding centre stage in late November 2017, the Parliament very quietly passed a Bill to limit plant and equipment depreciation deductions for rental property owners and deny travel deductions on rental properties. It has received the Royal Assent on 30 November 2017. As detailed in the May 2017 Budget, these changes apply from 1 July 2017 onwards.

What it means to you:

Plant & Equipment Depreciation Deductions

Any current rental properties that were acquired prior to 9 May 2017 will not be affected by this change.

For properties where contracts that were exchanged after 9 May 2017, any plant and equipment that were acquired with the property will be denied a depreciation deduction. However, any new plant and equipment purchased by the property owner after 9 May 2017 will be able to claim a depreciation deduction.

Plant and equipment means any fixtures that can be easily removed from the property such as dishwashers, hot water system, blinds etc.

Note: the laws relating to the building depreciation deduction remain unchanged.

Travel Expenses for Residential Rental Properties

For taxpayers who travel to check on their residential rental property, do maintenance, attend strata meetings, collect rent etc, the travel deduction will be disallowed from 1 July 2017 onwards. It is understood that the same laws will also apply to taxpayers who have to fly and pay for accommodation to inspect their properties.