2017 Federal Budget & It’s Effect on Australian Property Investors

Friday, May 12, 2017 / Services

Digesting a new budget can be an arduous chore for the average Australian, luckily there is no shortage of outlets all wanting to tell you how you will be affected by this latest set of figures from the treasury.

This years budget in particular has ​a few significant changes that directly relate to property investors, so we thought it would be a useful if we went into some detail about how these new policies will impact property investments for Australians. 

​As always this information is general, if you're looking for specific tax advice we recommend you speak with your accountant.

No More Tax Deductible Trips to View Your Investment Properties

For those of you who were previously flying interstate to check on your investment, unfortunately this is no longer a tax deductible trip.   Although there are many investors that were claiming this as a legitimate business expense, the government is looking to clamp down on people that weren't as legitimate, saving the treasury an estimated $540,000,000!

It should also be mentioned that previously you were able to claim for shorter trips, not just interstate, to check up on property. This is also no longer claimable. 

Changes to Depreciation Rules for Investment Properties

Another significant change are the new rules regarding how investors can claim depreciation on their investment properties.  

Previously all investors could claim depreciation on plant and equipment (removable items in the property such as ovens, fans, dishwashers etc) for the life of those items.  New rules that have been introduced (to come into place from July 2017) will now limit who can claim depreciation on these items.

Whilst previously the investor who has just purchased an established residential investment property would be able to claim on the depreciation of the existing plant and equipment items, this is no longer the case.​  

In order to be eligible to claim the depreciation on these items now, the investor will have to have been the one that actually paid for them as new (so buying the home does not count).  All investors will still be able to claim depreciation on the building.

It is worth noting, that when deciding if you should buy a new or established investment property, that you will still be able to claim the depreciation on the plant and equipment if you are the one that had the building constructed and fitted out in the first place.  Perhaps a little more reason to consider new property for your strategy?

As always, when it comes to technical aspects of your investment strategy, we would encourage you to set some time aside and speak with a professional to make sure you are getting the best advice possible to help you succeed!

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