Frequently Asked questions

What are the Budget Changes to Tax Depreciation from 9th May 2017?

Released on Federal Government’s Budget night in 2017, it is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value.

The Federal Government legislated new laws that affect claims to depreciation of plant and equipment (see Division 40) which come into effect from 9th of May 2017. It affects property investors whom purchase a residential property as an individual (not company or managed fund). It also affects property investors who switch their primary place of residence (PPOR) to an investment property after the 30th of June 2017.

In simple terms, this means that second-hand plant & equipment (division 40 - e.g. lights, blinds, appliances, flooring) can no longer be claimed. This would include some of the following scenarios:

  • Purchasing a second-hand property and renting it out
  • Purchasing a brand new property and living in it before renting it out

The legislation only affects plant and equipment which means that all residential properties may still claim building depreciation or otherwise known as capital works. Please refer to Thrifty Address Check Form. This is great news for property investors as it means they are still able to claim depreciation.

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