Top Questions (and answers) on Depreciation

Posted on 25/04/2019  

Washington Brown are leading Quantity Surveyors and one of Hotspotting's Panel of Partners.

Tyron Hyde is CEO of Washington Brown and here he answers investors top questions on depreciation and the impact of the 2017 budget changes.

How do the budget changes affect depreciation claims in new properties?

There’s no change. If you buy a new property you can still claim depreciation as before, including the Plant & Equipment claims as well as the Building Allowance.

How do they affect industrial or commercial property?

There’s no change. Provided it’s not a residential property, there’s no change. If you buy a second-hand property with retail downstairs and an apartment upstairs, you can claim depreciation on everything in the retail portion but you not the residential part.

Can property owners still claim on the bricks?

Yes, there’s no change to the claims for the building structure (the building allowance).

Can you still claim owner inclusions?

Yes, provided the Plant & Equipment items are new.

What about different ownership entities? 

If the property is owned by a company, there’s no change to what can be claimed. The same applies to a major super fund (but not a self-managed super fund) and a large trust – these entities can still claim depreciation on second-hand items.

Are existing situations grandfathered? 

Provided you owned the property before the 2017 Budget, there’s no change to what you can claim, and provided it has been an investment property the whole time.

How is inherited property affected?

When you inherit a property, you can claim the Building Allowance but you can’t claim depreciation on the Plant & Equipment items.

What’s the situation with apartments in a new development?

As an after-thought, the Federal Government decided that apartments can be sold as “new” up to six months after completion of the development.

Can owners of overseas properties claim depreciation?

Yes, if they are declaring income from their offshore property, they can claim depreciation - but the date of construction must be after 1990.

What happens if we renovate?

You can claim depreciation on the renovations as if it’s brand new.

What happens if we replace an item?

If you put in a new fridge or air-conditioner unit, you can claim depreciation, as long as the items are brand new. If GST is paid on the item, you can claim depreciation.

« Back