Changes in plant and equipment depreciation deduction within the property
ATO allows all property investors to claim deductions for the wear and tear occurs plant and equipment within the property which has been proposed in 2017-18 Financial year budget.
Under the proposed changes investors will able to claim deductions for new plant and equipment if they install in the property but when its handover to the new owner will not be allowed to claim any deductions for plant and equipment which installed by the previous owner.
This changes will hugely impact on property investors and that can discourage some of the investors to invest in the property market. These changes are for investors to stop over claim deduction for property and plant.
Investors, who purchase an established property after 09th May 2017 would be affected by this change. But there are no changes in relation to claiming capital work deductions also known as building write off that includes any capital work carried out in the property.
Now the question might arise what does it mean by plant and equipment. Plant and equipment are easily removable or mechanical assets that installed within the property e.g air conditioners, smoke alarms, garbage bins, blinds and curtains and also hot water systems.
Above change will not affect following cases:
– Owners of brand new residential properties
– Residential property investors who exchanged contractors prior to the 09th May 2017
– If anyone operates a business in property investment (Just buying a one or two properties not considered as a business and for further details please look at www.ato.gov.au).
New properties and hugely renovated properties will not be affected by this change. If the investors purchase a property from a developer purchaser will get six months to claim a deduction as long as the developer did not claim the deduction.
One of the biggest change in property investment in more than 15 years, parliament passed the Treasury laws amendment ( Housing Tax Integrity ) bill 2017 as at 15th November 2017. Therefore, above changes is now a legislation