I don’t know if the Quantity Surveyors have worked it out yet, but they have the most to lose from the changes to negative gearing that are currently being discussed.
Labor is promising to remove negative gearing from all purchased buildings that are not new buildings from 1 July 2017.
And the Government is considering a cap on deductions, which will include deductions on rental properties.
So either way, it looks like you and I won’t be able to claim all the current deductions on most rental properties soon.
If Labor win, after 1 July 2017, the only people who will want a tax depreciation schedule will be:
- The buyers of new properties – but it is pretty easy to ask for the information from the seller, especially the construction costs and even the depreciable assets are easy to value as they are new.
- Buyers who are not negatively geared.
Under the Labor model, if the interest costs, rates, management fees on the rental property washes out most or all the rent, I won’t want a tax depreciation schedule as my deductions cannot go above my rent (It cannot be negatively geared).
If the Coalition win and they cap deductions (The plan is to cap work related deductions and rental property deductions to a percentage of the taxpayer’s income), then there will also be a reduction in the need for tax depreciation schedules.
All my deductions other than those on tax depreciation schedules, like work related deductions, or interest, or rates, or management fees, or… are easy to work out what they are by just looking at bank accounts or invoices. So if I am going to go near or above the cap, the deductions I won’t claim are the ones that are hardest, and most costly, to assess – being the deductions in a tax depreciation schedule.
It looks like that either way the election go, the need for tax depreciation schedules is going to reduce.
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