IN BRIEF
Depreciation
takesahit
PROPERTY
TOP LOW-RATE
HOME LOANS
Reduce Home
Loans 3.44%pa,
3.42%pa AAPR^1 ;
Mortgage House
3.49%pa, 3.49%pa
AAPR; Freedom Lend
3.49%pa, 3.50%pa
AAPR; Homestar
Finance 3.49%pa,
3.52%pa AAPR.
Source: Canstar as at 19-
Jun-17, ranked by AAPR.(^1) AAPR on $250,000 loan
for 25 years.
U
ntil now property investors
could claim depreciation on
items such as dishwashers, fans
andotherfixturesevenifthey
were installed by a previous
owner. But proposed federal
budget changes mean they
will only be able to claim
depreciation on plant and
equipment items if they either
purchased the asset directly
themselves or bought a brand-
new property.
This may not sound like a big
deal but in dollar terms it’s a
“massive change to what you can
claim,” according to quantity
surveying expert Tyron Hyde,
from Washington Brown.
In calculating the effects on an
investor’s hip pocket, he found
thatifyoubuyanapartmentbuilt
in 2017 for $800,000 after the
budget you would be able to claim
$110,000 over the next 10 years.
Previously you would have been
able to claim $140,000.
T
he NSW government has announced a $4.3 billion
plan to address Sydney’s housing affordability issue.
First-home buyers are in line to receive a host of new
concessions and discounts, including the removal of stamp
dutyonproperties
under the value of
$650,000 and duty
reductions for those
up $650,000. The
9% duty on lenders
mortgage insurance,
forbuyerswitha
low deposit, will
be abolished.
A$10,000grantis
available for builders
of new homes up to
$750,000 and
purchasers of new
homesupto
$600,000.
But foreign investors were in the package’s line of fire,
with steep increases to stamp duty (up from 4% to 8%)
and land tax (up from 0.75% to 2%).
Infrastructure funding of $3 billion is designed to
accelerate new home
building approvals.
About 30,000 more
homes have also been
promised for “priority
precincts”, which
include inner-city
suburbs such as
St Leonards and
Crows Nest, and outer
metropolitan areas
such as Parramatta,
Sydenham-
Bankstown, and parts
of western Sydney,
the south-west and
the north-west.
NSW tackles housing affordability
XMORE
PROPERTY
STORIES ON
P60-
COMPILED BY STEPH NASH
TAX DEDUCTIONS
Source: CoreLogic. Data as at February 2017.
STAMP DUTY: WHO WILL BENEFIT
Dwellings
Units
Houses
What proportion of dwellings have sold at a price of $650,000 or
less over the past 12 months?
45.4%
42.7%
46.7%
NSW
Dwellings
Units
Houses
NSW REGIONAL
Dwellings
Units
Houses
SYDNEY METRO
73.4%
74.0%
3.3%
25.8%
33.5%
20.0%
SOLD
The changes will be grandfathered,
so investors may hold onto their
properties longer because they won’t
get any depreciation perks on the
next investment if they buy an
established property.
If you invest in a new property
this measure won’t really affect
you. You will still be able to claim a
deduction for the life of assets that
you purchase. This makes new
property much more attractive
to investors than established
property, which you might say
is the government’s way of
encouraging new housing supply.
However, owners of new
properties are also likely to
find it harder to sell in future, as
prospective investors will be less
likely to be able
to afford it.
With housing
affordability
reaching critical levels,
particularly in Sydney
and Melbourne, investors
have been challenged to
look beyond their comfort
zone for growth spots. If you
own, or were considering buying, an
investment property outside your own
state, unfortunately, you will no longer
be able to claim back your travel costs
as a tax deduction.
However, you will still be able
to claim deductions for expenses
incurred by third parties, such as
real estate agents for their property
management services.