There is no need to buy new just to get some depreciation tax breaks if a property has been recently renovated. Now that professionals have had a chance to absorb the new restrictions on depreciation of plant and equipment assets on established homes it is apparent that, with the assistance of a Quantity Surveyor, in many cases there are still opportunities out there for good tax breaks on established homes. What isn’t available any longer is covered in a previous blog article. The purpose of this article is to suggest some areas where there are still opportunities. The two main areas are for investors who add new plant and equipment assets to their property after purchase and directly incur the expense and for investors who purchase properties which are considered to have been substantially renovated by the previous owner. To refresh your memory on this subject the depreciation rules for residential property apply to building that commenced construction after the 15th of September 1987. They were introduced by the Hawke/Keating Government, initially at 4% (25 years) then subsequently reduced to 2.5% (40 years), as part of the recovery from the rental crisis brought about by the short lived abolishment of negative gearing in 1986. Often the older post 1987 properties on the Gold Coast have been renovated and qualifying capital works completed by a previous owner that can be claimed by the new owner for any years that remain in the 40 year depreciation period. Owners of older buildings constructed prior to 1987 should still find out what capital works deductions are available, as often these buildings will have undergone some form of renovation which can result in a deduction for their owner. In the scenario below the investor exchanged contracts on say a 15-year-old four-bedroom, two bathroom, house after the date of 7:30 PM on 9 May 2017. The previous owner of the property had completed renovations which included updating the kitchen through installing new cupboards and bench tops five years ago and adding an outdoor pagola seven years ago. Based on information supplied by BMT Tax Depreciation the investor would be eligible to claim 2.5% on the original structure and fixed items plus 2.5% on the recent improvements based on their estimated installation cost. This scenario should result in about $7000 in capital works deductions in the first full financial year or $35,000 in cumulative deductions over five years. You should also be thinking about refurbished bathrooms and recent extensions when it comes to making buying decisions and working out your tax depreciation base. The investor would also be eligible to claim depreciation for any brand-new plant and equipment assets they chose to purchase and add to the property themselves. Investors can learn more about the current depreciation legislation changes by downloading the excellent BMT white paper at: https://www.bmtqs.com.au/documents/essential-depreciation-facts-2017-budget.pdf. by David Hamilton Buying New or Established - it’s not Black or White! palmbeachfn.com.au March 2018 First National Palm Beach Corner of 6th Avenue & Cypress Terrace, Palm Beach, Queensland 4221 Phone: 07 5559 9600