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Changes to property investors

The Federal Budget comprised a number of policy changes that impacted property investors.

The Federal Budget comprised a number of policy changes that impacted property investors.

These new changes centred around what they can and can't claim, and an increase in capital gains tax concessions to boost investment in affordable housing.

Travel expenses

From July 1, property investors will no longer be able to claim tax deductions for travel expenses related to owning an investment property, including inspecting, maintaining or collecting rent from a property.

In addition, investors will not be able to depreciate plant and equipment such as appliances and utilities if these were bought by a previous owner.

This means that you will only be able to claim deductions on items that you actually purchased yourself.

Tax incentives for investments in affordable housing

The Federal Government also made some sweeping changes to capital gains concessions.

Within the Budget, the Government announced that it would encourage local investors to invest in new and existing affordable renting housing by increasing the capital gains tax (CGT) discount from the current 50% to 60% for qualifying affordable housing.

To be eligible for this measure, which will come into effect on January 1 2018, housing needs to be of below-market rent and available for tenants on low to moderate incomes.

Investors will also be required to have the affordable housing managed through a registered community housing provider and the property held for a minimum period of three years.

An additional discount will be pro-rated during periods when the property is not used as affordable housing.

Local investors already investing in qualifying affordable housing will be eligible for the additional 10% CGT discount.

This discount will also be provided to local investors that own affordable housing through Managed Investment Trusts (MITs) where the property has been held for a minimum three years.

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Posted in: Property investment

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