The Confusion of Low Cost Assets

Every day we are fielding questions from investors and their advisers who are unsure if they should be claiming investment depreciation on their property since the new legislation was passed.  What is clear is that there is still much confusion online in forums and chat rooms, and sometimes from advisers themselves.  We seek here to put a few myths to bed and it shouldn’t matter how recently you bought your rental property. Even if it was just bought a couple of weeks out from the end of the financial year and it’s always worth getting a depreciation schedule done sooner to be prepared. Whether you’ve owned the property for only three days or three months on June 30 – you are still entitled to claim for immediate write off, low cost assets, as well as pro-rate of the building and large assets. You’d be surprised to find out many investors claim up to $3,000 for brand-new properties and more for just the first week of holding their investment depreciation property.

Immediate write-off assets are anything you’ve bought brand-new for the building that was under $300 – things like smoke alarms, door locks, exhaust fans and so on. The new legislation will only affect residential investment properties owned by individuals or personal structures such as self-managed superannuation funds or trusts are affected.  Investment properties that are owned by corporations or large company’s investment trusts remain unaffected. If you have purchased an Australia investment depreciation property in a company, contact us today for a depreciation estimate and obligation-free quote. Investors who purchased their investment properties after May 9, 2017 are still able to claim for capital allowances and depreciation of their investment property. For purchases of brand-new properties, nothing has changed in the new legislation.  All structural (Division 43) and Plant and Equipment assets (Division 40) are still claimable as they were previously.  Not only do these brand-new properties generate the highest amount of depreciation to deduct each year, but with plans and total construction costs provided we can provide full Australia investment depreciation schedules for these properties at a discounted rate.

You are will not be affected by the budget announcement and new legislation. A principle called “Grandfathering” applies to you, meaning that the legislation that was in place when you purchased your investment property will continue to apply for you, so you may continue to claim your depreciation as you have previously.  Our schedules provide full reporting for Division 43 Capital Works (for 40 years), plus itemized asset depreciation for each plant and equipment asset across their effective lives, maximizing the deductions for every investor. You are still able to claim all the deductions that were claimable under the previous legislation.  The updated legislation only refers to those second-hand assets acquired in the purchase of an investment property so the brand-new properties with new assets are not affected by the changes.  Brand new properties generate substantial Australia investment depreciation deductions for investors. Unfortunately, not many people are aware that you are able to make these claims – including some accountants - so if you have just purchased an investment property, it is well worth checking what depreciation deductions you would be entitled to this year.