Limits on Depreciation Claims Passed by the Senate

Legislation proposed in the 2017 federal budget to limit the deductions investors can claim on property deprecation, gained senate approval on the 15th of November.

Any ‘plants or equipment’ (things that can easily be removed from a property, such as carpets and dishwashers) that were installed by the previous owner, will no longer be included in tax deductions for property depreciation.  Any ‘plants or equipment’ installed by the new owner are deductable as normal.

The changes are applicable to any contracts entered into after the 9th of May 2017. The new legislation applies only to pre-owned residential properties; new developments and commercial properties are unaffected. However, those excluded assets can be claimed as an expense when calculating capital gains tax when it comes time to sell the property, ultimately keeping potential losses minimal overall.

For more information, click here.

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