From 1 July 2017, individual, trust and SMSF taxpayers who bought a residential rental property after 7.30pm on May 9, 2017, are not able to claim depreciation on plant and equipment that was purchased prior to their date of acquisition of the property (e.g. the plant and equipment was purchased by a previous owner of the residential property).
Depreciation on plant and equipment which they purchase themselves for their second-hand property can still be claimed provided the item purchased is not second hand.
The new legislation does not impact the following:
• Investors who purchase a brand-new residential property.
• Investors who exchanged contracts on a residential property prior to 7.30pm on 9 May 2017.
• Investors who add new plant and equipment assets to their property after purchase and directly incur the expense.
• Investors who purchase properties which are considered to have been substantially renovated by the previous owner.
• Non-residential and commercial properties.
• Any deductions that arise in the course of carrying on a business.
• Any residential property held in a superannuation plan (other than Self-Managed Super Funds).
• Investors who hold residential property in corporate tax entities, including company entities.
• Home owners who turned their primary place of residence into a rental property prior to 1 July 2017.