New Restrictions on Second-Hand Asset Depreciation for Rental Property Owners
Since the 2018 income year, certain rental property owners, like individuals, trusts, SMSFs, and certain partnerships, face limitations on claiming depreciation for second-hand assets. These restrictions affect assets acquired after 7:30 pm AEST on May 9, 2017, for residential rental properties.
Basically, if you buy a second-hand asset for your rental property after this date, you can't claim depreciation deductions starting from July 1, 2017. There are also transitional rules affecting deductions for certain assets bought before May 9, 2017, and exceptions to consider (see S.40-27).
However, the rules for claiming depreciation on new assets in rental properties and applicable capital works write-offs under Division 43 remain unchanged.
Similarly, if you use a depreciating asset in your rental property for a purpose other than earning rental income (like installing solar panels for generating electricity), the rules for claiming depreciation remain the same.
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