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NEW LIMITS - on deductions for rental properties


In the 2017-18 Federal Budget the Government announced a number of measures aimed at the tax treatment of property owners, including limits on deductions for travel expenses and depreciation. Treasury has released draft legislation that seeks to:

· Prevent rental property owners from deducting travel expenses incurred from 1 July 2017 if they relate to a residential rental property.

· Prevent depreciation deductions from being claimed for second hand assets used in a residential rental property.

These changes are intended to apply from the 2018 income year to assets acquired on or after 7.30pm on 9 May 2017.

The new rules dealing with depreciation deductions should not generally prevent deductions being claimed in situations where someone buys new residential property from a developer (e.g., off the plan) and no one has resided in the property before.

The changes are not intended to apply to taxpayers carrying on a business, companies or certain widely held trusts.

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