The New Changes to Rental Property Deductions
If you have invested in or are considering investing in the property market, you might want to know about two major changes recently made to rental property deductions:
Travel associated with rental properties
For the 2017/2018 and subsequent financial years, taxpayers who own rental properties will no longer be able to claim tax deductions for costs incurred in travelling to inspect or maintain their rental property. This includes air fares and accommodation, as well as car expenses, and it extends to travel to see real estate agents and to hardware stores to purchase materials for repairs.
Depreciation claims on items previously used in residential rental properties
Where fixtures and fittings are purchased after 9 May 2017, depreciation will not be allowed on those items from 1 July 2017. Note that this restriction only applies to fixtures and fittings that were previously used. If you purchase or build a new property for the purposes of residential rental investment, then the fixtures and fittings can still be depreciated because they have not been previously used. Also note that the building allowance can still be claimed. So, there is still some incentive to consider obtaining a quantity surveyors report if a building allowance can be claimed on a property, or if the property is new residential premises.
There are 2 main exceptions to these new rules:
- Companies that own and rent out residential properties;
- Residential rental businesses such as motels, aged care facilities and student accommodation businesses.