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By Fleur Anderson and Kamahl Cogdon
March 24, 2004
Aussie News!
PROPERTY investors face shrinking tax deductions under a crackdown on depreciation claims.
Carpets, whitegoods, curtains and even stuffed crocodiles bring in up to $12,000 a year in tax windfalls for savvy investors.
The Australian Taxation Office is now reviewing the items for residential property investors can claim depreciation.
Real Estate Institute of Victoria chief executive Enzo Raimondo said any change in deductions risked turning investors away from the market when it was already under pressure from interest rate rises.
"Impacting on investors' ability to deduct expenses will leave little incentive to invest in real estate," Mr Raimondo said.
He said an investor desertion could create a rental crisis, with fewer homes available and rents rising.
The ATO is believed to be considering reclassifying items listed under the lucrative depreciation tax break. Items include light fittings, emergency light systems and satellite dishes, among others.
A tax office spokesman would not detail the changes but said the new rules could be released as soon as next month.
"It will provide greater guidance and clarity to taxpayers," he said.
The tax office recognises that rental properties can suffer wear and tear just like cars.
Even fittings like door knobs and ovens can be depreciated over time.
Not all investors can get the windfall. The building has to be built after 1985 and major improvements before 1992 can't be claimed as deductions.
Among property investors who negative gear, about 70 per cent claim depreciation on their assets and a quarter claim capital works deductions.
People who own investment units could lose out on their depreciation claims because the maximum claims on many fittings, such as fire sprinklers, will be slashed.
Nevertheless, tax specialist Depreciator said there were still unusual items that investors had successfully depreciated.
"Stuffed crocodiles are listed under the master tax guide as a depreciating asset," company manager Scott Brunsdon said.
"It's a beautiful irony that a dead crocodile has an effective life of 20 years under the tax system."
This report appears on NEWS.com.au.
March 24, 2004
Aussie News!
PROPERTY investors face shrinking tax deductions under a crackdown on depreciation claims.
Carpets, whitegoods, curtains and even stuffed crocodiles bring in up to $12,000 a year in tax windfalls for savvy investors.
The Australian Taxation Office is now reviewing the items for residential property investors can claim depreciation.
Real Estate Institute of Victoria chief executive Enzo Raimondo said any change in deductions risked turning investors away from the market when it was already under pressure from interest rate rises.
"Impacting on investors' ability to deduct expenses will leave little incentive to invest in real estate," Mr Raimondo said.
He said an investor desertion could create a rental crisis, with fewer homes available and rents rising.
The ATO is believed to be considering reclassifying items listed under the lucrative depreciation tax break. Items include light fittings, emergency light systems and satellite dishes, among others.
A tax office spokesman would not detail the changes but said the new rules could be released as soon as next month.
"It will provide greater guidance and clarity to taxpayers," he said.
The tax office recognises that rental properties can suffer wear and tear just like cars.
Even fittings like door knobs and ovens can be depreciated over time.
Not all investors can get the windfall. The building has to be built after 1985 and major improvements before 1992 can't be claimed as deductions.
Among property investors who negative gear, about 70 per cent claim depreciation on their assets and a quarter claim capital works deductions.
People who own investment units could lose out on their depreciation claims because the maximum claims on many fittings, such as fire sprinklers, will be slashed.
Nevertheless, tax specialist Depreciator said there were still unusual items that investors had successfully depreciated.
"Stuffed crocodiles are listed under the master tax guide as a depreciating asset," company manager Scott Brunsdon said.
"It's a beautiful irony that a dead crocodile has an effective life of 20 years under the tax system."
This report appears on NEWS.com.au.
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