My husband and I purchased a rental property in Melbourne a few years ago. A friend mentioned there were changes announced in the Federal and Victorian Budgets that will affect the tax we pay for the property. Is this true?
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There are a number of changes proposed by the Federal and Victorian Budgets that may affect you.
Firstly, from 1 July 2017, travel expenses you pay in relation to your rental property, can no longer be claimed as tax deductions. These can include travel costs such as to inspect, maintain, or collect rent.
In addition, from 1 July 2017, landlords will be unable to claim tax deductions for the declining value of plant and equipment items such as dishwashers and ceiling fans that they have not purchased themselves. As you have purchased your home before 9 May 2017, this change should not affect your current rental property and you can continue to claim these expenses in your tax return.
In relation to the Victorian budget, the key change that may affect you is the introduction of a vacant residential property tax. This tax may apply if your rental property is vacant for more than a total of six months in a calendar year. If this is the case, you will pay a rate of 1% of the improved value of the property since you bought it.
However, if in the future you choose not have the property as a rental there may be other exemptions which may apply so that you don’t have to pay the additional tax. These exemptions are for holiday homes, units used for work purposes, and legitimate temporary absences such as medical care or appointments overseas.
It is also important to keep in mind that these changes will only take place if they pass through parliament and are legislated.
Should you have further questions, you may wish to speak to your tax adviser. For more information of this topic or if you have another tax question e-mail me at tax.albury@crowehorwath.com.au.
Any information in this article has been prepared without taking into account your personal circumstances. You should seek professional advice before acting. While reasonable care is taken in the preparation of this information to the extent allowed by legislation, Crowe Horwath (Aust) Pty Ltd ABN 84 006 466 351, accepts no liability whatsoever for reliance on it.
Travel expenses you pay in relation to your rental property, can no longer be claimed as tax deductions.