13 Dec Income Tax Assessment Act 1997 – 2017 Amendment
The 2017-18 Federal Budget handed down in May surprised many investors with its proposal for significant depreciation changes (division 40 – plant and equipment). The last major changes to depreciation legislation were made in the mid 1980’s!
The intention of the amendment is to alleviate plant and equipment being depreciated by successive property owners (sometimes in excess of the actual value).
On 15th November 2017, the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 has passed through the Senate. This was a landmark change to the legislation surrounding property depreciation and the eligibility to claim plant and equipment assets in second-hand residential properties.
We have received numerous calls from clients wondering how the changes impact their existing arrangements and future purchases.
Property Asset Planning works closely with BMT Quantity Surveyors – Australia’s largest and most successful tax depreciation company. BMT have created a comprehensive white paper document Essential facts: 2017 Budget changes and property depreciation.
The good news for existing property investors is:
The changes only apply to second-hand residential properties
Properties purchased (or contracts signed) prior to 7:30pm on May 9th 2017 are unaffected
This is because the previous depreciation legislation has been Grandfathered
Any investor who purchases a brand new property can continue to claim depreciation for plant and equipment as normal.
Do you have a Depreciation Report?
Property Asset Planning recommends each investment property (residential or commercial) has a BMT Tax Depreciation Report prepared to maximise the deductions on the property. The benefit of maximising your deductions is the increase of cash-flow by reducing the amount of income tax you pay!
Whilst we know that these reports are beneficial for anyone who owns a property, BMT puts their money where their mouth is…. they are so confident in their service, they Guarantee they will find double their fee in deductions in the first full financial year or there is no charge for their service.