Comments on: New depreciation legislation for Australian property investors

By: BMT Team

BMT Team — Thu, 28 Jun 2018 06:33:08 +0000

Hi Kay,
Thanks for getting in touch.
In the first scenario, the owner would not be entitled to claim depreciation for plant and equipment assets. Under the new legislation, a property owner will not be able to claim depreciation on pre-existing plant and equipment assets within properties which have been lived in as a primary place of residence where the owner decides to rent the property out after the 1st of July 2017. Plant and equipment assets within this scenario are considered previously used.
In the second scenario, the owner would only be able to claim depreciation for plant and equipment assets for the first six-month period where it was rented out. They would not be able to claim these benefits if they decide to rent it out again. Since it stopped being a rental after the 1st July, the legislation kicks in for any future re-introduction of classifying the property as a rental.

The good news in that in both situations, the owner will still be able to claim building write-off, provided the property was constructed after the 15th of September 1987. This generally makes up 85-90 per cent of a depreciation claim, so it is likely there’d still be significant deductions to be found.

Thanks,
BMT Team

By: Kay

Kay — Thu, 21 Jun 2018 08:51:00 +0000

Just wondering

1) What if the first home buyer purchased the property before 9th May 2017, and and lived their place for first 6months and rent out from Nov 2017?
Are they still eligible to claim the benefit?

2) what if the first home buyer purchased the property before 9th May 2017 and rented out first 6months and move in at Nov 2017 and later a year they rent out again maybe sometime in nov 2018? Are they still eligible to claim the benefit? Or is it just the first 6months they rent out the place to tenant?

Thanks

By: BMT Team

BMT Team — Wed, 10 Jan 2018 03:21:06 +0000

Hi Rohit,

Thanks for your question.

When selling an investment property you have claimed depreciation for, whether you purchased it before or after the 9th of May 2017, you may need to pay back these deductions in the form of Capital Gains Tax (CGT). This is a complex matter and something we recommend speaking with your Accountant about should you be selling your investment property, or planning to sell in the future.

Depending on your circumstances you may be eligible for a CGT exemption or discount. You can read more about this here – https://www.bmtqs.com.au/maverick/mav-39-exempt-from-paying-CGT and here – https://www.bmtqs.com.au/bmt-insider/six-capital-gains-depreciation-facts-property-investors/

For more information on how CGT will impact those properties affected by the budget changes, please refer to page 10 of our budget whitepaper – https://www.bmtqs.com.au/documents/essential-depreciation-facts-2017-budget.pdf

By: Rohit

Rohit — Tue, 05 Dec 2017 07:52:33 +0000

Can you please confirm what are the new changes if you are selling an investment property which you had it either before 9th may or after 9th may 2017 on which you have already claimed depreciation, will you have to pay back when selling the property, or there is no change on that?

By: BMT Team

BMT Team — Thu, 30 Nov 2017 02:55:26 +0000

Hi Kevin,
Thanks for your question.
These changes apply to depreciation of plant and equipment assets in second-hand residential properties which exchanged contracts after 7.30pm on the 9th of May. This means that if a property was purchased between the 9th of May 2017 and the 30th of June 2017, the owner will not be able to claim depreciation on previously used plant and equipment.
There is an exception to this date which relates to the renting out of a primary place of residence. A property owner will not be able to claim depreciation on pre-existing plant and equipment assets within properties which have been lived in as a primary place of residence where the owner decides to rent the property out after the 1st of July 2017. Plant and equipment assets within this scenario are considered previously used and cannot be claimed .

Thanks,
BMT Team

By: Kevin Frazer

Kevin Frazer — Mon, 20 Nov 2017 09:16:59 +0000

Hi there.
From my readings this change will apply from 1 July 2017.
This means depreciation from date of purchase (after 9 May) to 30 June 2017 will still still be deductible.
Please confirm you thinking on this point.
Cheers.
Kevin Frazer