Depreciation Changes

There is a little known change that slipped through the last budget without a lot of attention. While it may have slipped through unnoticed it is a change that could have a major impact on cash flows for investors… on.

The changes are as follows: If you buy a second hand property, even if it is only a week old (i.e. you did not build it) you are no longer able to depreciate the fixtures and fittings. This will have a major impact on cash flows for buyers of second hand property. Calculations say that it will cost investors of second hand properties tens of thousands of dollars.

This has been a roundabout way for the government to discourage investors from buying second hand property and encourage investors to build new houses and increase the currently undersupplied housing market.

Like I have always said, if your strategy is to buy and hold property for the longer term, then it is important to build new in a high growth area.