Investment Property Changes
If you own or plan to buy an investment property, you need to know about the key tax changes introduced on 1 July 2017, which still affect your ability to claim deductions today.
Here’s what property investors must understand when it comes to travel expenses, depreciation rules, and affordable housing incentives.
No More Tax Deductions for Travel to Rental Properties
Prior to 1 July 2017, travel costs to inspect, maintain, or collect rent from a residential investment property were tax-deductible. That is no longer the case.
Under the new rules, individual investors can no longer claim deductions for travel related to:
Inspecting rental properties
Performing maintenance work
Collecting rent
Exceptions: This change does not apply to corporate landlords, property management businesses or investors who own their property through a business structure.
Depreciation Rules for Plant and Equipment Tightened
If you purchased any plant and equipment (e.g. ovens, dishwashers, air conditioners) after 9 May 2017, depreciation deductions can only be claimed if:
You personally incurred the expense, and
The asset is brand new.
If you acquire a property that includes second-hand plant and equipment (e.g. through a purchase from another investor), you cannot claim depreciation on those existing items.
Instead, these items are factored into the cost base of the property for CGT purposes, meaning they can reduce your capital gain when you eventually sell the property.
Key Takeaway: You can still claim depreciation on brand-new plant and equipment you purchase, but not on second-hand items included in a property purchase.
CGT Discount for Affordable Housing Investors
To boost affordable housing supply, the Federal Government introduced a new 60% Capital Gains Tax (CGT) discount (up from 50%) for investors who provide eligible affordable housing.
This change took effect from 1 January 2018.
To qualify for the extra 10% CGT discount:
The property must be rented to low-income tenants at a reduced rent;
A registered community housing provider (CHP) must manage the tenancy;
The property must be held for at least three years.
The discount applies to both new and existing affordable housing investments that meet the criteria.
Access to Affordable Housing via Managed Investment Trusts (MITs)
From 1 July 2017, resident investors can also access affordable housing investment opportunities through MITs, offering a concessional tax treatment on investment income.
Even non-resident investors and foreign entities can participate in this model, increasing the pool of investment into affordable housing, an initiative aimed at addressing the housing crisis.
What This Means for You
If you:
Own a rental property,
Plan to purchase an investment,
Or are considering affordable housing as a long-term investment,
these tax law changes can materially impact your deductions, CGT obligations, and investment strategy.
Need a second opinion on your rental property tax deductions?
Contact Dolman Bateman, Sydney’s trusted accounting and advisory firm, to ensure you’re not over-claiming—or missing out on opportunities.
Disclaimer: The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. All content relates to the current financial year only. Future changes to tax laws, thresholds or administrative requirements may affect the accuracy or relevance of this information, so you should always confirm that the guidance remains current. While every effort has been made to ensure accuracy at the time of publication, Dolman Bateman accepts no responsibility or liability for any loss or damage arising from reliance on this information. You should seek professional advice tailored to your circumstances before making any financial or tax decision.
