Tax Changes for this financial year – have they changed investment desirability?
A year ago we saw some changes to what property investors can claim at tax time. But has this change slowed down investment property purchases? Or has it just been another contributing factor to our current market condition?
In May last year the federal government proposed changes to the depreciation of plant and equipment assets. They also made changes to travel expenses in relation to inspecting, maintaining or collecting rent for an investment property. Travel expenditure is not recognised as claimable or as a base cost of a property for capital gains purposes. If you purchased a property and at that time for example there was an air conditioning unit you cannot claim depreciation on it.
Any investor that purchases a new property can continue to claim depreciation as per usual. So the better question is, is it best to buy new and claim depreciation or buy an older more established home and accept that not everything can be depreciated?
When it boils down to it the government seems to be leaning more incentives to build, this is also evident in the first home owners grant. The idea is to promote growth and also promote employment for communities. However, is that how we want our community to grow? build and push outwards and leave behind already established homes?
In our local area these grants and depreciation rules are pushing more and more builds out to Treendale, Millbridge and Dalyellup. Offering their new improved shopping centres with large retailers all whilst the centre of Bunbury may slowly be fading away.