The latest Federal Budget changes to depreciation rules have halved new investor benefits resulting in ongoing consequences for already softening property markets, according to analysis by MCG Quantity Surveyors.
A comprehensive study of tax depreciation schedules by MCG revealed the results of depreciation benefits being slashed in the 2017 Federal Budget.
MCG’s report found the average first-year claim for properties affected by Budget changes was $5,456, while those were unaffected by the new rules could claim $11,929 on average.
The five-year average numbers were even more dramatic with budget affected properties able to claim just $23,497 compared to the $46,840 claimable for non-affected properties.
MCG’s managing director, Mike Mortlock, said this halving of claimable benefits will play a major role in the extended slowdown of residential markets.
“Property markets were already heading toward price softening after reaching a peak in late 2017, which means these changes were probably unnecessary and seem more like political posturing than anything else,” Mr Mortlock said.
“With the first full financial year under the new rules now complete, we can finally see what they mean for real estate investors.
“While investors continue to have worthwhile claims of around $5000 in the first year on average, there’s no denying landlords were penalised in the budget.
“We believe these depreciation changes, along with fallout from APRA moves, may well have forced the market into an early downturn and will likely see the slowdown extend beyond what could have normally been expected.”
