Changes to Deductions for Residential Rental Properties for 2018

Changes to
Deductions for
Residential Rental
Properties for 2018

New restrictions relating to travel and depreciation claims for residential rental properties have been imposed by the Government to take effect as from 1 July 2017. Travel expenses related to inspecting or maintaining a rental property are no longer deductible irrespective of when the property was acquired.


Depreciation claims will no longer be available in respect of depreciating assets acquired after 9 May 2017 (either separately or as part of a residential property), where the assets have been ‘previously used’ (e.g. assets used by a former owner or second-hand assets).
Before this amendment, a purchaser was able to allocate a portion of the purchase price to depreciating assets purchased with the property (i.e. plant and equipment) and claim capital allowance deductions under Div 40, creating opportunities where successive investors could ‘refresh’ the value of these assets and claim amounts in excess of their actual value.


Deductions are now limited to outlays actually incurred by the investors for new assets acquired on or after 9 May 2017. Thus, assets that have been purchased second hand or previously used by the investor and placed in the rental property can no longer be claimed as deductions under Div 40.