The Federal Budget 2017 has cut two long standing tax deductions that residential property investors enjoy.
The first is the tax deduction for travel expenses, which has been cut out:
Property Investors like to visit their rental property to inspect it between tenancies, to carry out maintenance and repairs and collect rentals. The petrol, the airfares, the accommodation, and other travel expenses will no longer be tax deductible for travel after 30 June.
Tip Visit your rental property before 30 June.
The second is the tax depreciation for plant and equipment, which has been cut down:
There is no longer any depreciation if the plant or equipment is in a property purchased after 7:30 pm (AEST) on 9 May 2017 (the time when Budget 2017 was handed down). In a new house or off-the-plan apartment, this could be worth up to $2,000 per annum.
What does this apply to? According to the Budget Papers: Plant and equipment items (usually mechanical fixtures or those which can be ‘easily’ removed from a property) such as dishwashers and ceiling fans. We will need to wait for the full list, but it is likely to include: stoves, range hoods, hot water systems, clothes dryers, air conditioning units and solar panels.
The plant and equipment will not be depreciable if it is already in the property when it is purchased. It will be depreciable if purchased by the property investor.
Tip Buy plant and equipment separately, (not as part of a property purchase contract).
For more information click on the current law and a full extract on the new law from the Budget Papers