Following the Federal Budget Announcement on May 9th 2017, the Government has made significant changes to the way investors can now claim tax depreciation deductions. One of the key points is that Investors who purchase a second-hand property after May 9th, 2017 will no longer be entitled to claim depreciation on Plant & Equipment in the property. These items include blinds, carpet, ovens, air-conditioners etc.
This is leading many people to believe that there is no benefit in proceeding with a depreciation report if they purchased an older property after the 2017 announcement. NOT TRUE!
With the end of Financial Year fast-approaching, we want to remind investors who have recently purchased a second-hand property that if they do not have a Depreciation Schedule prepared, they could be missing out on THOUSANDS of dollars in tax deductions.
Consider the following example from a recent client of ours.
Rachael purchased a 4 bedroom, 2.5 bathroom house in Brisbane in Jan 2018. She paid $650K and the property was built in 1995. It was clear that a previous owner had renovated the kitchen and the bathrooms. Whilst there was no depreciation deduction available for the existing “previously-used” Plant and Equipment items, Rachael was able to claim on the Capital Works component of the original structure and of these previous renovations.
Our Tax Depreciation partners Washington Brown were able to achieve ATO-compliant tax deductions in excess of $80,000 over the next 20 years!
Rachel will also be able to claim on all new plant and equipment items she purchases for the investment property going forward.
Remember: The cost of a report is fully tax deductible and is a one-off expense and is claimable in the financial year it is paid.
Washington Brown happily offer a discounted fee to clients of The Edge Property Buyers. To find out if you are eligible to claim depreciation and to receive a free quote, click on the link below
