Confused about the new depreciation rule

my situation:

Prior to purchase my PPOR the previous owner made extensive renovation including a new kitchen,, floors, curtains and etc. My PPOR became a rental on 1 May 2017. In the 2017 financial year tax return, I did not claim any depreciation on this property knowing the tax rule change on depreciation items.

However recently by listening to property related podcasts, it seems to me that the depreciation rules are grandfathered and for rental properties purchased prior to the budge date/or 30/6/2017 can still claim depreciation expenses.

Anyone here who understands the rule can explain this further?

Thanks

 

I thought it was 9 May 2017.

I will let one of the tax agents respond but I think you could possibly claim depreciation under the old system.

 

There is a post made earlier today about this specific issue

Can you depreciate Division 40 items when...

Unless the property produced rent in the 2017 year you are out of luck. The grandfathering issue comes with a number of twists. A property purchased pre--Budget must also have produced rental income in the 2017 year. I cruel trick IMO.

If yours was rented May-June 2017 you may be OK provided you havent tainted the property assets through use. You may be able to amend to correct the claim. Maybe advice to confirm entitlement first ? The QS may provide that advice and quote for a schedule to reflect the former owners works.

The intention is to slowly choke old QS reports out of existence. Possession of a QS report is not a right to deductions going forward.

I see the ATO making a big issue about this in a coming year. They will focus on depreciation deductions for properties newly acquired or part year schedules etc. Taxpayers without diligent advice could face issues.

 

Yes the must have been rented in the 2017 financial year is a nasty little trick.

 

"My PPOR became a rental on 1 May 2017"

Sounds like it did.

 

It is one element of the tests.

 

Did you speak to a depreciation schedule provider about this? From what I can see, you are entitled to your claim and should pick up the phone! It's always best to see professional advice--the grandfathering provision was known from the start (and is quite common with this sort of legislative change), so it seems an assumption was made rather than "knowing the tax rule change". Anyway, if you haven't contacted a quantity surveyor yet, now's the time!

What wasn't known from the start was the condition that previously (pre-9/5/17) acquired properties be rented prior to the 1/7/17 in order to allow a plant & equipment claim. That was the nasty surprise that came later.