With the new budget comes a host of changes.
In regards to investment property, these changes will make investment property’s less desirable from a taxation perspective.
The first change is the elimination of travel expenses as a tax deduction. Ordinarily, should one have an investment property interstate, the travel to inspect the property will be deductible. All applicable expenses are deductible such as flights, accommodation, meals, taxi’s etc. Owners of interstate investment property’s are allowed to claim one trip per annum.
Local investment property owners are also allowed to claim travel expenses (however this will not include flights for obvious reasons) and is usually limited to car travel expenses, taxi’s and Uber (there may be provisions for accommodation/meals depending on the distance of the property to one’s primary residence (i.e. rural investment property’s).
Once the proposed changes are enacted, travel will no longer be claimable, however paying an agent to look after the property will still be deductible (the agent can include their travel in your bill)(along with travel to visit your accounting firm Melbourne).
The second change is to the depreciation of the property. Currently you are able to claim deduction for the reduction in value of all removable assets (i.e. stoves, hot water heaters, air conditioner’s etc). If you have purchased your property prior to 9th May 2017, your depreciation will continue as per normal. It is proposed that any property purchased after 9th May 2017 will not be able to claim depreciation on removable assets purchased by the previous owner (or installed upon construction). Assets will only be subject to depreciation deductions if the new owner purchases the assets themselves (any Melbourne accountant will be able to calculate the depreciation for you).
It is assumed depreciation on the buildings themselves will not be effected, however this is yet to be confirmed.
Should anybody have any queries on the proposed changes, please contact your local accountant South Yarra for clarification.