Changes in Rental Property deductions

In the 2017 – 2018 Budget, the government announced changes to deductions relating to residential rental properties.

Firstly, the travel deductions relating to inspecting, maintaining or collecting rent for a residential investment property will no longer be deductible. The travel expense will also not be included in the cost base of the property for CGT purposes.

Although, if you have a property agent managing the property on your behalf, these travel expenses incurred by the agent will still be deductible.

Secondly, Investors who purchase an established residential investment property after 7.30pm 9th May 2017, will no longer be able to depreciate the existing plant & equipment using a depreciation schedule.

For investors to be able to claim depreciation on existing plant and equipment for properties purchased after 9th May 2017, they will need to purchase a brand new residential property or renovate and replace the existing assets with new assets they purchase themselves.

There is no change for those who purchased their investment properties before 7.30pm 9th May 2017. If these investors don’t already have a depreciation schedule for their existing investment property, a schedule for these properties will still be prepared in accordance with the legislation that was in place when they purchased their property.

Commercial, industrial and other non-residential properties won’t be affected by these changes either.