Last month the Senate passed the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017, with which came changes to depreciation for existing residential properties purchased after 9 May 2017.

The purpose of the amendment is to stop owners and investors claiming overstated deductions by ‘refreshing’ the values of previously used depreciating assets in residential rental properties.

How does this affect me?

If you have acquired an existing residential property containing ‘previously used’ depreciating assets after 9 May 2017, you will no longer be able to claim depreciation on those assets in future tax returns.

This being said, depreciation able to be claimed under the old rules can be added up and treated as a capital loss when doing capital gains tax calculations.

If you are the owner of a brand new property, you will not be affected, and can carry on claiming depreciation as you have done so to date. Commercial, industrial, retail and other properties will also not be impacted by the legislative changes.

As always, if you have any questions or concerns, please don’t hesitate to contact your adviser.