Depreciable items that have been used or installed and are ready for use by your clients or another organization are referred to as second-hand depreciating assets for residential rental properties. They are typically remnants of items that existed in:

• A property when your clients bought it.
• Their private residence was subsequently rented.

Items may consist of the following:

• Flooring and window coverings.
• Pool pumps, spas, washing machines, alarm systems, and air conditioning.
• Goods used in both your client’s home and the rental property.

Since July 1, 2017, unless the property is used for operating a company (such as a hotel) or they are an exempt entity, your clients cannot claim the drop in value of utilized depreciating assets. Before this date, properties that were rented out or properties that are either of the following:

• Newly constructed
• Extensively renovated (when a structure is completely replaced or removed), and

1. The assets haven’t been used as a deduction by anyone else.
2. The property was empty when your clients bought it, or
3. Your clients bought the home within six months after its construction or significant refurbishment.

Inquiries To Make With Your Clients

Here are some inquiries to make with your clients to ensure you get it right:

• When did you make the property your own?
• Was the structure new or old?
• Before renting it out, did you reside there?
• When did you begin leasing out the property?
• When you purchased the rental property, was the asset already there?
• Does the property serve commercial needs?

Wrapping It Up!

At KPG Taxation, our accountants provide an array of tax consulting and compliance services. Our registered tax agents are knowledgeable and qualified to provide accurate accounting and taxation services to clients. We follow the standards and amendments finalized by the ATO to ensure tax compliance. We aim to maintain your transaction records and financial reports to help meet long-term financial goals.