In the 2017 federal budget, the Coalition government changed the rules relating to what you can and can’t depreciate.

The new rules relate to second hand residential investment properties only and had the effect of denying depreciation on existing plant & equipment items such as carpets, hot water systems, white goods, etc, if contracts for purchase were first exchanged after 7.30 pm on 9 May 2017.

The question this then raises is, is it still beneficial to obtain a Tax Depreciation Schedule for for my second hand investment property?

The answer is usually YES, but it’s not as straight forward as first thought.

As we can no longer claim depreciation of the plant & equipment, this only leaves the depreciation on the building itself (known as the Division 43 Capital Works Allowance). As long as construction of the investment property commenced after 16 September 1987 there will be an deduction available to you.

Any renovations completed on the property, by either yourself, or a previous owner that commenced after this date will also be depreciable and available to you.

So in short, if you have recently purchased a second hand investment property where construction commenced after 19 September 1987 it is still very much worthwhile obtaining a Tax Depreciation Schedule.

If the property was built before 16 September 1987 and has had renovations, extensions or alterations completed to it, it will in most cases also be beneficial in obtaining a Tax Depreciation Schedule.

If the property was built prior to this date, and is in original condition, then it’s probably not financially beneficial in getting a Tax Depreciation Schedule done.

If you have any queries or questions relating to your property, please call the friendly team for a free, no obligation free assessment.

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