July 10, 2018

What You Need To Know About The Legislation Changes To Rental Property Tax Depreciation Claims

With the 2017 changes to rental property depreciation deductions, there is some confusion among property investors in regards to what can now be claimed.

The good news is that Capital Works, or Division 43, has no change to legislation, which means investors can still claim deductions for the immovable structural elements of a building, such as; ceilings, foundations, walls, swimming pools, windows and toilets.

The changes only apply to Division 40, Plant and Equipment, which includes assets that are not part of the properties structure, like; carpets, ovens, dishwashers, blinds and smoke alarms.

It’s important to remember that the change in legislation only affects second hand residential properties.

In a nutshell, the new legislation does not allow depreciation deductions for previously used plant and equipment in second hand rental residential properties if the contracts were exchanged after the 9th of May 2017 at 7.30pm. Should an investor purchase new plant and equipment after the 9th of May 2017 at 7.30pm, they can claim a deduction over the effective life of the asset.

Investors, who purchased a second hand property before the 9th May 2017 at 7.30pm, are not subject to the changes and can continue claiming as before. Likewise, property investors who have lived in their investment properties prior to the 1st of July 2017 are also exempt to the new legislation.

So, who can compile a tax depreciation schedule?

The Australian Taxation Office has identified that a Quantity Surveyor is the profession properly qualified to produce a legal property tax depreciation schedule. Accountants, by Australian tax law, are no longer authorised to prepare or estimate construction costs. 

Why should I use Rawlinsons (W.A.) for my tax depreciation schedule?

Rawlinsons (W.A.) experienced Quantity Surveyors are highly trained, holding Bachelors of Science in Construction Management and are members of the Australian Institute of Quantity Surveyors. Our team are experts in the valuation of construction costs, with the ability to accurately estimate construction costs where the information is not readily available.

As the creators and editors of the extensively circulated Rawlinsons Australian Construction Handbook and Rawlinsons Construction Cost Guide, our staff have access to the most comprehensive and current library of construction pricing information and data sources in Australia.

It’s past the 30th June, can I still use a tax depreciation schedule for the 17/18 year?

Do you know that although it is past June 30, you can still have a tax depreciation schedule compiled by a qualified Quantity Surveyor and use this to submit with your tax return? Our fee can be claimed in the current financial year, but the schedule can be used to lodge past years returns and is valid for the life of the property.

Contact us today for an obligation free quotation, and, for the month of July 2018, reference this article for a 10% discount.

Written by
Kirsty Maxted for Rawlinsons