tax deductions for property investors

Some key changes to legislation on tax deductions [VIDEO]

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Some key changes to legislation on tax deductions on rental property investments were passed on 30 November 2017. The effective date is from 1 July 2017

1) Travel expenditure related to residential rental property including Motor Vehicle expenses, taxi or car hire costs, airfares, meals and accommodation will now be

-Not deductible to entities that are not carrying on a business: and

-Excluded from the cost base for CGT purposes

This includes any expenditure incurred in inspecting, maintaining or collecting rent as well as travel to visit a real estate agent or to attend an owner’s corporation meeting.

This includes travel undertaken by someone else on your behalf if the taxpayer reimburses or directly pays for that travel. Travel to engage third parties such as a real estate agent to provide property management services will remain deductible.

Note that travel expenditure in the course of carrying on a business e.g for retirement living, aged care or student accommodation or property management services is still deductible.

2 ) Depreciation on Plant & Equipment in residential rental premises is now limited

Deductions are limited to outlays actually incurred by investors and not previously used.


A carpet acquired as part of an apartment installed by a previous owner will not be depreciable.

A new fridge acquired by the taxpayer and installed for use by a tenant will be depreciable

A second hand washing machine acquired from a friend will not be depreciable as it would have been previously used.

Assets acquired in a supply of new premises may be depreciable if the premises were supplied as part of the supply of the current premises and at an earlier time, no one was residing in the premises in which the assets was used or installed ready for use. The new premises must have been supplied within 6 months of the premises becoming new residential premises.

3) Vacancy fee

Annual vacancy fees will be payable to foreign owners of residential land where the property is not occupied or genuinely available for rent for at least six months in a 12 month period. All foreign persons will be required to lodge a Vacancy fee Return within 30 days after the end of the vacancy year.

As always this information is of a general nature to assist you in understanding the changes to the law. Please consult a suitably qualified tax accountant who can assist with interpretation to your personal circumstances.

What can you do?

Related:  The BIG Superannuation Re-Think

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