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If you purchased your investment property after 9 May 2017, or plan on buying in the future, new depreciation laws will affect you.

Under the new legislation, investors of new properties will continue to take advantage of depreciation claims, while owners of existing dwellings (bought after 9 May ’17) will be subject to new restrictions on these claims.

Under the new laws, investors of second-hand properties will be disadvantaged compared to investors of new properties, with new restrictions on property depreciation claims.

Owners of pre-owned residential properties will not be able to claim depreciation on plant and equipment assets, such as air conditioning units, solar panels or carpet.

ABS studies show that 97% of Australians purchase previously owned properties, and the new laws are expected to have a huge impact on these investors. The remaining 3% of investors who purchase brand new residential properties are unaffected by the new laws, with a few key points to note:

• When purchasing a new dwelling from a property developer who has already found a tenant for the property, investors can only claim plant and equipment depreciation if they acquire the property from the developer within 6 months of the construction completion date.

• Investors who live in a property that was purchased brand new, and then decide to lease the property out (after 7:30pm on 9 May 2017) will not be entitled to claim plant and equipment deductions as the assets are considered “previously used.”

• Any additional assets acquired after settlement can be depreciated as normal as long as the assets have not been previously used.

These changes are extremely positive for investors of new property with a view to hold long term. Although the financial implications of this legislation requires investors of pre-owned properties, to re-calculate their position and perhaps change strategy depending on the impact.

Importantly, for anyone interested in investing in 2018 and beyond, depreciation implications should be taken into account when deciding between an investment strategy for a new property vs pre-owned dwelling.

While there still thousands of dollars to be claimed by Australian property investors, seeking advice from a professional is a critical step in your due diligence to ensure all deductions are maximized.

For more information on investing and maximizing your deductions speak to a property buying expert at Search Find Invest www.searchfindinvest.com.au or call 1300 132 970