If you own a holiday home or Airbnb your property out, the new depreciation laws may affect you, if you reside in the property yourself at some time.
The Government in the Housing Tax Bill Explanatory Memorandum states that if a property is used in an "incidental way" or "occasionally used" then your depreciation eligibility on the Plant & Equipment (P & E) does not stop if you acquired that P & E prior to The Budget in May 2017.
Incidental Way is described as: "Use is incidental if it is minor in the context of the overall use and arises in connection with another non-incidental use - for example staying at the property for one evening while carrying out maintenance activities would generally be incidental use."
Occasionally Used is described as: "Spending a weekend in a holiday home or allowing relatives to stay for one weekend in the holiday home free of charge that is usually used for rent would generally be occasional use."
However, it's a bit vague in my view? Does one week a year over Christmas nullify your claim? What about if you stay for Easter and Christmas?
The ATO needs to clarify this situation and if this applies to you, I would check with your financial advisor before booking your property out prior to your next holiday!
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Tyron Hyde is the CEO of Washington Brown and is considered one of Australia’s leading experts in property tax depreciation. He is also a registered tax agent. Washington Brown manages construction costs worth over $2 billion and completes 10,000 schedules annually. For a depreciation schedule quote CLICK HERE and follow the 3 simple steps or estimate your depreciation cost.
The Washington Brown Free Depreciation Calculator will give you an estimate of the depreciation deductions you could claim on your investment property
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