Changes to depreciation for second-hand residential properties

New legislation has been passed which makes changes to depreciation for second-hand residential properties. Where contracts have been exchanged after 7:30pm on the 9th of May 2017, the new owners will be ineligible to claim depreciation on plant and equipment assets, such as air conditioning units, solar panels or carpet.

In one of the most dramatic changes to property depreciation legislation in more than 15 years, Parliament has passed the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017, with the Bill now legislation.

The Good News

The good news is that there are still thousands of dollars to be claimed by Australian property investors, as there has been no change to capital works deductions, a claim available for the structure of a building and fixed assets such as doors, basins, windows or retaining walls. These deductions typically make up between 85 to 90 per cent of an investor’s total claimable amount.

It’s more important than ever to work with a specialist Quantity Surveyor (like BMT Tax depreciation) to ensure that all deductions are identified and claimed correctly under the new legislation and that all deductions are maximised.

Existing Owners can continue to claim

Previously existing depreciation legislation will be grandfathered, which means investors who already made a purchase prior to this date can continue to claim depreciation deductions as per before.

New premises and Commercial premises unaffected

Investors who purchase brand new residential properties and commercial owners or tenants, who use their property for the purposes of carrying on a business, are also unaffected.

Subsequent improvements are depreciable

Owners of second-hand properties who exchanged after 7:30pm on the 9th of May 2017 will still be able to claim depreciation for plant and equipment assets they purchase and directly incur an expense on.

Find out more

To find out more about the new depreciation legislation and how this applies to a range of property investment scenarios, contact the office and ask for Amanda or Noel on 03 9585 7555 or email

#incometaxreturn #incometax #taxreturns #property #propertyinvesting #taxaccountantcheltenham #Depreciation