Most will be aware that the 2017 Federal Budget removed depreciation on fixtures and fitting included in a 2nd hand rental property, for example – carpets, window covers, hot water services, ovens, and the like, If purchased post the 9th May 2017.
If you have owned an investment property prior to 7.30pm on 9th May 2017 (2017 Federal Budget Announcement), you weren’t effect by the changes, and as such still able to depreciate any 2nd hand fixtures and fitting already in the property.
Opportunities to look for in a
2nd hand properties to still get the depreciation on fixtures and fittings post 9th May 2017.
- Look for properties that have been renovated by the previous owner for sale – all fixtures and fitting involved in the renovations will be considered new, allowing for depreciation.
- If the property though 2nd hand is deemed to be substantially renovated in the course of preparing to sell, as such will be reclassified as a new residential property, all the fixtures and fitting throughout the property can be depreciated , as if you purchased a new property to rent.
- (The property will be subject to GST, see Purchaser to remit the GST blog separately for details)
- For a 2nd hand property to be considered “Substantial Renovated“, would require a combination of structural and non-structural work to have been carried out in the course of preparing the property for sale, that you purchased to rent.
- Structural Renovations may involve :- altering, removing or replacing foundations, floors, supporting walls, or parts thereof (interior or exterior), lifting or modifying roofs, replacing existing windows and doors where brickwork is altered (single to double door).
- Non-Structural Renovations may involve :- replacing electrical wiring or plumbing, replacing, removing or altering non-supporting walls, or parts thereof (interior or exterior), plastering or rendering an entire wall or walls, removing or replacing kitchen cupboards, bathroom fixtures, air conditioning or security systems.
Principal Place of Residence as a Rental!
Renting your previous Principal Place of Residence (PPR) for the first time after the 1st July 2017.
Owners of PPR, though owned prior to 2017 Federal Budget, are effected by the removal of the 2nd Hand Fixtures and fitting Depreciation deductions, if rented after the 1st July 2017 for the first time. As such though you installed that new air con, and re-carpeted in recent times, you won’t be able to claim any depreciation on those fixtures and fittings. However if you buy new fixtures and fitting thereafter you will be able to claim depreciation on these fixtures and fittings.
If you would like further advice, please contact our office.