Depreciation Schedules for older properties revisited
With the new rules from May 2017, can we still claim depreciation for these properties?
The answer to some extent is yes and no.
The Australian Federal Government introduced The Treasury Laws Amendment ( housing tax Integrity )Bill 2017 introduced from 7: 30 pm May 2017 and as a result the following rules now apply:
Plant and equipment items formally claimable under division 40 can no longer be claimed if they have been previously used, however, if you buy a new dishwasher from a retailer and install it you can claim that particular item. If you were to take your old dishwasher from home and install it in your rental property, then you cannot claim a deduction for it as it is ‘previously used’. This applies to all plant and equipment items which are things like appliances, heating & cooling, hot water, removable floor coverings, window furnishings and the like.
Capital Works Expenditure
Capital works items can still claim in relation to previously used properties. These items are defined under div 43.
These items relate to anything constructed since July 1985 either by you, or a previous owner and and can be deducted at 2.5%per annum over a period of 40 years from the date of construction, of the original building or the date of the relevant Improvement or extension to the original building.
Improvements can loosely be described as the ‘shell’ of the building and include things such as kitchen upgrades bathroom upgrades new roof plumbing roof restoration rewiring, re-stumping building additions and many many more items including painting. it could include external items such as sheds fencing pavements and the like.
This is where our expert quantity surveyors at MTD have particular specialist experience over 4 decades in determining what items have been done since the original construction and additionally in white decade they have been done.
Apartments with Common Areas
Pre-existing or previously used apartments that are part of a complex having common facilities and common areas that are subject to an owners corporation, have an advantage in that div 40 plant and equipment items included within these areas can still be claimed.
These items include things such as lifts, security, fire protection items, automatic door operators, emergency egress to name but a few.
In summary although there are some items that can no longer be deducted in relation to older or previously used properties, however there are still many thousands of dollars that can be claimed by way of having a specialist Quantity Surveyor assess your investment property.
Property investors with older previously used properties would still be well advised to include a properly prepared tax depreciation schedule in their tax returns so as to claim the benefits that are still available.