Back on November 15, 2017 when much of our Federal Parliament’s attention was focused on the results of the same-sex marriage survey the senate quietly passed the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017. It creates new rules around property investing and will impact a lot of Australians.

Put simply, if you exchanged contracts to buy a second-hand residential property after 7.30pm on 9 May 2017, you are unable to depreciate plant and equipment that became yours as part of the sale. Plant and equipment include easily removable items like:

  • cooktops
  • ovens
  • dishwashers
  • air conditioning units
  • blinds
  • curtains
  • security systems
  • solar panels
  • hot-water systems
  • carpet.

Most calculations show that the average investor will miss out on around $4,236 a year in deductions. So why all this bother? It seems that plant and equipment assets were being depreciated by successive property investors, beyond their actual value. And the government was concerned.

It’s not all bad news though. Capital works — things like alterations, extensions, retaining walls, fences or a new driveway— remain unaffected. So do fixed items like doors, mirrors and basins. These typically make up 85-90% of the average claimable amount.

And nothing changes if you’ve bought a new residential, or a new or second-hand commercial property. And, for our developer readers who’ve built a new residential property and can’t sell it? You can rent it out for six months and still sell it to an investor as “new,” with full depreciation entitlements.

These changes are unlikely to stop property being Australia’s favourite investment strategy. But it’s more important than ever to protect yourself by getting quality advice, so you know for sure what you can and can’t claim.

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