Residential Property Investors lose depreciation and travel deductions

Depreciation for fittings and fixtures

From 1 July 2017, Government will limit the deductions for depreciation of residential property fixtures will only be allowance for expenses outlaid by an investor. The changes will be applied to previously used plant & equipment acquired at or after 7:30pm on 9th May 2017 unless it was acquired under a contract entered before this time; and plant & equipment acquired before 1 July 2017 but not used to earn income in either the current or previous year.

Investors who purchased new plant & equipment after 9th May 2017 will continue to be able to claim a deduction over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property.


Deduction of travel expense

Deductions for travelling to residential rental property to collect rent, maintain the property or complete an inspection will no longer be allowable after 1 July 2017. This is an integrity measure to address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes. As part of the Government’s strategy to improve housing outcomes, this measure will provide confidence in the tax system by ensuring tax concessions are better targeted.

Expenses for engaging with third-parties such as real estate agent for property management services will remain deductible.



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