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Deferred Depreciation


In November 2017 new legislation passed limiting depreciation claims for some residential investment properties. It’s important to note that the changes only ‘limit’ deductions and only on ‘some’ residential investment properties.

Properties that are affected, benefit from a twist that can substantially reduce your future Capital Gains Tax obligation. The depreciation that was previously able to be claimed can be ‘deferred’ and claimed when you sell the property. Our new Deferred Depreciation Schedules™ help your accountant take advantage of this new provision

Depreciation Changes in the 2017 Budget

The facts:

  • Commercial property is NOT affected
  • Property owned by companies or trusts is NOT affected
  • Brand new properties are NOT affected
  • Even properties up to 6 months old are NOT affected
  • Buildings themselves are NOT affected
  • Depreciation Schedules that were in use before the changes are NOT affected

So what is affected?

The only thing affected is the Assets in second hand residential properties. Assets are things like appliances, aircon, hot water, carpet, blinds, and curtains etc etc.

Depreciation on Assets in second hand properties purchased after 9/5/17 cannotbe claimed. BUT, that depreciation can be deferred and used when the property is sold to reduce your Capital Gains Tax.

Investment Property Reference Table

Treated differently after 2017 Budget Building Depreciation Asset Depreciation Deferred Depreciation
New residential property or less than 6-Months old No Yes Yes No
Commercial property No Yes Yes No
Used residential property exchanged before 10/05/17 Leased after 30/06/17 Yes Yes No Yes
Used residential property exchanged before 10/05/17 Leased prior 01/07/17 No Yes Yes No
Used residential property exchanged after 09/05/17 Yes Yes No Yes
*Substantially renovated residential property exchanged after 09/05/17. No Yes Yes No
Residential property owned in Company Structure No Yes Yes No

Introducing Our Deferred Depreciation Schedules™

On a near new, good quality, property held for 5 years and then sold, the Deferred Depreciation™ could amount to $25-30,000. That is a significant CGT saving.

To help you benefit from this CGT saving upon sale of your property, we now have a Deferred Depreciation Schedule™. Our Deferred Depreciation Schedule™ will detail clearly for your accountant how much they can deduct from your CGT bill when your property is sold.

If you have an affected property and elect to not include the Assets at all, we can do a Special building Write-Off Schedule for a reduced fee.

Call the Depreciator team on 1300 66 00 33 now to get a FREE Depreciation Assessment for your investment property

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