SECTION > FINANCE
NEW LIMITS ON TRAVEL AND DEPRECIATION DEDUCTIONS FOR RESIDENTIAL ACCOMMODATION
F
rom 1 July 2017 new laws are imposed on individuals, Self-Managed Superannuation Funds and discretionary trusts who invest in residential real estate. The new laws will deny a tax deduction for travel expenses relating to a residential premise and depreciation allowances on previously used residential premise assets. Travel costs in relation to residential rental properties will no longer be tax deductible to inspect and maintain the property, attend body corporate meetings, collect rent or meet with the real estate agent. The denied travel costs include airfares, accommodation, car hire and meals. Also, any of the travel costs incurred will be prevented from forming part of the cost base of the property for capital
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LIVING ISSUE 13, 2018
gains tax purposes. Additionally, the costs cannot be amortised over 5 years. Depreciation deductions on plant and equipment for investors in residential property will be limited to actual outlays incurred. Plant and equipment generally consist of items such as carpets, dishwashers, hot water systems, washing machines and ceiling fans. If you did not hold the asset when it was first used or first installed ready for use in the residential property, the depreciation deduction will be denied. Also, if the assets have been previously used in the investor’s residence the tax depreciation deduction will be denied. Additionally, use of an asset by the investor and or related parties that is more than occasional in a residential