The Tax Man Takes a Little More!

By Steve Marsten

To all property investors - on Wednesday 15^th November, 2017 Parliament passed the Treasury Laws Amendment (Housing Tax Integrity) Bill. This is the biggest change to property investment rules in 15 years .

So an outline of the legislation is that all contracts entered into for second hand properties (purchased for investment purposes) after 7.30pm on 9^th May, 2017 will not get Depreciation deductions for existing plant and equipment assets and removable and mechanical assets.

Assets like Air conditioners; exhaust fans, garbage bins; smoke alarms; solar paneling and hot water systems; dishwashers and blinds etc. Note that new additional assets can still be claimed as before along with any capital works carried out on the purchased property after the contract has settled. Assets like sheds; carport or garage extensions and fencing etc.

Also what appears interesting is that contracts signed (but perhaps not settled prior to 7.30pm on the 9^th May 2017 do not appear to be affected. Not that there will be many of these.

Commercial property owners and tenants are unaffected by the legislation and should be business as usual. They will continue to claim deductions on building structures (subject to original build dates etc) as well as wear and tear on plant and equipment assets.

Assets affected by the change in legislation may still be useful in reducing future capital gains or increasing capital losses.

And finally the Quantity surveyors will not be out of a job in respect to the need for investors buying new properties or still requiring an assessment on the original build cost for the capital allowance claims. Their property reports are still essential for supporting depreciation and capital allowance claims. Also the cost of getting a Quantity surveyors report on an investment property still remains tax deductible.

So if you have any question on property and tax feel free to ring the experienced team at Sothertons on 4972 1300.