Substantial depreciation deductions still available

Many of Australia’s 2.1 million property investors are still missing out on substantial depreciation deductions each year by failing to maximise or claim depreciation for their rental investments.

Changes to depreciation legislation were introduced over a year ago on the 15 of November 2017. While these have impacted some investors, there are still thousands of dollars available to be claimed by property investors.

Owners of properties directly affected by the legislation changes, (i.e. second-hand residential properties where contracts were exchanged after 7.30pm on the 9th of May 2017), still had an average claim of $5,651 in the 2017-2018 financial year. (Source: BMT Tax Depreciation).

Despite the changes, BMT claim to have found their clients an average of $8,212 in legitimate tax deductions during the 2017-2018 financial year for residential properties.

What do the changes to legislation mean for property investors?

This legislation has been grandfathered, which means if you exchanged contracts prior to 7.30pm on the 9th of May 2017 you will not be affected. However, for those who exchanged contracts on a second-hand residential property after that time, you will no longer be eligible to claim depreciation deductions on previously used plant and equipment.

What can still be depreciated?

There are still plenty of opportunities available to claim tax depreciation for investment properties.

New houses are still eligible for deductions on plant and equipment, as are properties considered to be substantially renovated by the previous owner.

Plant and equipment assets that have been installed and paid for by you will also continue to be tax depreciable.

Other examples where you will still be able to claim deductions for plant and equipment include:
• Deductions that happen in the course of carrying out a business
• Deductions for a property held by public unit trusts and managed investment trusts
• Where the property is held by a company.

Still claim Capital Works

All property investors can continue to claim depreciation for qualifying capital works. This is considered to be the building’s structure and any permanently fixed assets such as the walls, roof, doors, tiles and toilets. These deductions make up 85% – 90% of a total depreciation claim.

Still unsure what these changes will look like for you?

It is essential for property investors to always seek expert guidance on what they can claim to ensure they are not missing out on valuable deductions and risk getting it wrong.

If you would like further information on how these changes may impact you and how simple it is to reap the maximum reward from your investment property, contact our office. We work with experts like BMT who can help you to find and maximise legitimate tax deductions from your investment property and ultimately increase your cash flow.

Feel free to contact either Noel or Amanda on 03 9585 7555 oremail us

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