If you have invested in property in the past which has cost you to hold that property, then this year’s budget may not have been very good news for you.
After Tuesday night’s budget, those taxpayers have far less scope to reduce their tax bill using net rental losses on an investment property.
There will be a blanket ban on travel expense claims, which means deductions for travel to inspect, maintain or collect rent on a property will be disallowed.
“This is an integrity measure to address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes,” the budget papers say.
Expenses for investors who engage third parties such as real estate agents will still be deductible.
In addition, there will be limits on how much can be deducted for depreciation of plant and achaten-suisse.com equipment. These are mechanical fixtures or those which can be easily removed from a property, such as dishwashers and ceiling fans.
“This is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value,” the budget papers say.
“Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent investors.”
The changes will apply from 7.30pm on budget night, with existing investments grandfathered.
Those investments will continue to give rise to deductions for depreciation until the investor no longer owns the asset or the asset reaches the end of its effective life.
Assets purchased after budget night will attract a deduction over the effective life of the asset but subsequent owners will not be able to claim deductions on that asset.
The negative gearing clampdown comes amid a broader debate about highly indebted property investors with modest household incomes posing a threat to the economy if there is a downturn.
Foreign property-owners are in the firing line. They will be denied the capital gains tax exemption on the sale of a main residence.
If using a Buyers Agent, you will be minimising that cashflow into those properties, therefore this will not affect you. Contact us below for an introduction to a trusted buyers agent we use personally.
[contact-form-7 id=”651″ title=”Contact form 1″]
Source: AFR.com.au