Changes To Rental Property Deductions

The 2017 Budget, that was delivered on 9 May 2017, has brought about two major changes that will impact all current and future rental property owners.

The first change, which will impact existing owners of rental properties, is the removal of the deductibility of the travel expenses effective from the 1 July 2017. This means, if you travel to inspect or maintain your property you will no longer be able to claim this expense on your tax return. The 2017 tax return, will be the last time you will be able to claim this expense.

The second and more substantial change, will only impact the purchase of a new rental properties that is purchased from 9 May 2017 and onwards, this is the removal of the ability to depreciate plant and equipment (such as dishwashers, ovens, air conditioners, etc) that come with the property. Prior to the 2017 Budget, when you purchased a property you could obtain a tax depreciation report for the depreciation you could claim on that property. These changes apply to second-hand plant and equipment you acquired at or after 7.30 pm (AEST) on 9 May 2017 unless you acquired them under a contract entered into before this time, which means, you can only claim depreciation on plant and equipment you purchase once you own the property.

Depreciating Assets In A Rental Property Purchased Before 9 May 2017

If you owned a rental property, or entered into a contract to purchase your rental property before 7.30pm on 9 May 2017, you can continue to claim deductions for decline in value of the depreciating assets that were in the rental property before that date.

It doesn’t matter whether the depreciating asset installed in the property was new or used, or whether the property was new or not.

If you would like to know how this will affect your individual circumstances, please contact our office.