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New Tax Depreciation Rules – 2017

As at Wednesday the 15th of November 2017, the new Treasury laws amendment ( Housing Tax Integrity ) Bill 2017, owners of second-hand residential properties ( where contracts were exchanged after 7.30pm on the 9th of May 2017 ) will be no longer able to claim depreciation on Plant and Equipment assets, ie carpet, window blinds, ceiling fans etc. However you can still claim the Capital works ( division 43 ) the structural part of the property.

So what does this mean exactly ? – If you have purchased a second hand home after the 9th of May 2017, you are no longer able to deduct the Plant and Equipment in the property. The good news is that you can still claim the Capital Works which is the bulk of the depreciation anyway. In most properties, the percentage of plant and equipment is generally around 10 % of the total depreciation. You still have up to 90 % to claim which can come to thousands of dollars !

This new legislation does not apply to brand new residential houses / units or commercial property purchased after the 9th of May 2017

What if i purchased my property after the 9th of May 2017, can i still claim depreciation ?

Yes, if its a brand new property the rules are the same, if its a second hand property then you can no longer claim the plant and equipment within, ie carpets, blinds, cook tops etc   

If i bought my house years before and lived in it, then decided to rent it out, can i still claim the depreciation ?

If purchased before the 9th of May 2017 and you have claimed any depreciation before the 1st of July 2017 then yes ! the old rules still apply. If you decide to rent it out after the 1st of July 2017 then the plant and equipment inside is deemed to be second hand and no longer depreciable.

Is any plant and equipment claimable in a second hand residential home ?  

Yes, if you purchased the new plant and equipment while it was a rental property then this can be included. It is deemed to be new and has never been depreciated before.

Does the new rules apply to commercial property ?

No, if you purchased a commercial property or run a business in that property, the old rules still apply.

If i purchased a property in my self managed super fund can i claim depreciation for the plant and equipment ?

If purchased after the 9th of May 2017, you can no longer claim the plant and equipment, only the Capital Works.

If i purchased a property in my company name can i claim the plant and equipment ?

The good news is yes ! – the old rules still apply.

Is the date purchased, the “contract date” or the “settlement date” for the new depreciation rules ?

It is the contract date, however you must have claimed some depreciation in the 2017 financial year, to be able to claim. If you lived in the property and didn’t rent out until after the 1st of July 2017 then the plant is no longer claimable.