New legislation has just passed, which will affect travel and depreciation claims for residential rental property owners.
This change is effective from 1 July 2017 and will impact property investors in their 2017-18 tax return and future years.
Any tax returns for 2016-17 and prior years will be unaffected by these changes.
WHAT ARE THE CHANGES TO TRAVEL?
Under the new law, residential rental property owners will no longer be able to claim travel expenses when visiting their rental property.
Michael lives in Melbourne and owns a residential rental property in Brisbane. In August 2017 Michael flew up to Brisbane to visit his rental property.
Because Michael visited his rental property after the new legislation took effect, he can’t claim any expenses for his travel.
WHAT ARE THE CHANGES TO DEPRECIATION?
Under the new law, you are no longer able to claim depreciation deductions for any used or second hand assets you have acquired since 7.30pm on 9 May 2017. You can continue to claim depreciation deductions for brand new assets.
Sharon owns a residential property that she has been renting out since September 2015. In March 2017, Sharon bought a second-hand fridge to replace the previous fridge that had broken down.
Because Sharon bought the second-hand fridge for her rental property before 7.30pm on 9 May 2017, she can still claim depreciation deductions for any remaining life of the asset.
However, if Sharon had bought the second-hand fridge in September 2017, she wouldn’t be able to claim a depreciation deduction for the fridge.