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Some good news for Depreciation changes for Property Investors!
Posted: August 8 2017
Some good news for Depreciation changes for Property Investors!
Most investors know that there were changes to depreciation announced in the May 9 Federal Budget. The draft legislation was released recently and cleared up some confusion, but also contained some good news.
First up, the clarifications:
The changes do NOT affect commercial property.
The changes do NOT affect brand new residential property.
The changes do NOT affect property purchased before May 9, 2017.
The changes do NOT affect deductions claimed on the building itself. So what is affected? With second-hand properties purchased (exchange of contracts) after May 9, 2017, you will no longer be able to claim depreciation on the Assets: appliances, floor coverings, air con, hot water etc. (But in many cases, there is still plenty to claim on the building itself.)
Any Assets you buy and add yourself to the property, you will of course be able to claim.
Now, for the good news:
With these second hand properties, the depreciation you could have claimed on the Assets under the old rules can be tallied up and deducted from the profit when you sell the property. This reduces your Capital Gains Tax. But for your accountant to know how much they can reduce your CGT, the Assets need to be valued when you buy the property. That’s where we come in.
We are having a very busy August. It seems a lot of people are visiting their accountant, advising them that they bought a property in the last year or so, and their accountant is saying, ‘Well, where is your Depreciation Schedule?’
Lan is the Founder and Chief Strategist at Success Accounting Group, Melbourne based CA firm. In a matter of short 8 years she has built up a reputable Chartered accounting firm with 3 offices and a team of 6 professional accountants and support team members. Her mission is to provide Innovative and Strategic Financial advice to help her customers make smarter financial decisions today for a brighter future.
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