Changes to Rental Property Deductions – What You Need to Know
The Federal Government has released draft legislation for the 2017-18 tax year that will limit certain deductions on rental properties.
The proposed measures are the government’s attempt to address housing affordability by tackling the negative gearing of rental properties outlined in the May 2017 federal budget.
The two areas affected by the draft legislation are travel costs and depreciation deductions.
Travel costs will have an outright ban on deductibility, while depreciation on plant equipment will be limited to those directly incurred by the tax payer. This means property investors can only claim depreciation on dishwashers, fans, and other fixtures they’ve paid for themselves, presumably by purchasing the property brand new. Investors who bought established properties before May 9th 2017 can continue to claim depreciation on those items going forward.
The government expects the changes to save the federal budget about $260m.