Taxation

New Depreciation Legislation for Australian Property Investors

Changes to property depreciation laws have been introduced and it is important to understand how these work and what they mean to you. Don’t despair, there are still many claims you can make depending on your circumstances, but you need to clear on what is and isn’t allowed. Here is a great video from our friends at BMT Tax Depreciation which gives a simple overview of what is new and what can and cannot be claimed.

Did you know that you could be saving thousands of dollars simply by claiming depreciation for an investment property?
Unfortunately 80 per cent of investors are simply unaware of the deductions available for the structure of a building (capital works) and the easily removable plant and equipment assets contained within an investment property. Read more →

Small businesses can immediately deduct assets costing less than $20,000 purchased since 7.30pm 12 May 2015. The asset deduction is claimed in the income year in which the asset is first used or installed ready for use.

What’s changed?

The instant asset write-off threshold has increased to $20,000 (up from $1,000). This allows an immediate deduction for the business use portion of a depreciating asset that costs less than $20,000. This applies:

• to assets acquired after 7.30pm on 12 May 2015 until 30 June 2017
• on a per asset basis, so several assets each costing less than $20,000 would qualify
• to new and second hand assets

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Many people are unaware that they are failing to maximise their tax deductions in relation to rental properties and therefore also failing to maximise their rental property returns.  If you have a rental property is always an opportune time to check one such deduction – Depreciation.
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With ongoing low interest rates it seems the hot property market won’t end any time soon. Hand in hand with that is also a boom in investment property ownership. The tax office has always shown a keen interest in investment properties but it has signalled it is specifically targeting this area in 2015 returns.

The emphasis is on making sure people aren’t over claiming deductions. In particular the ATO has said it is paying close attention to the following:

• Excessive deductions claimed for holiday homes
• Husbands and wives splitting rental income and deductions for jointly owned properties that is not supported
• Claims for repairs and maintenance shortly after the property was purchased
• Interest deductions claimed for the private proportion of loans

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