The proposed changes announced last week in the Federal Budget effecting Negative Gearing are designed to restrict the tax deductions available when an investor buys an established residential property. Anyone who buys an established property for investment purposes after 7.30pm on 9th May 2017 will no longer be able to claim depreciation on the Plant & Equipment – Division 40 (fixtures & fittings) that comes with the property, including in strata common areas. It is designed to prevent ‘double-dipping’ by all successive owners of the property claiming depreciation on the same pieces of plant & equipment.
Brand New Properties and Commercial Premises are exempt.
This move by the Federal Government wasn’t foreseen by the market and caught everyone off guard. It sends a strong message that both the Liberal and Labor parties are targeting investors in the war on housing affordability. While this is not good news for new investors entering the market, existing investment property owners are in luck – the proposed changes won’t affect people who already own rental properties. So now is a good time to ensure all eligible property owners have a Tax Depreciation Schedule in place to take advantage of the tax deductions that new investors won’t be entitled to.
We cannot predict what Government changes may come next, so please ensure your current investors are claiming what they can whilst they can!