Applying the depreciation restriction to rental properties acquired before 9 May 2017
It is commonly understood that the new depreciation restriction from 1 July 2017 can only apply to ‘previously used’ (e.g., second-hand) depreciating assets acquired after 9 May 2017 (either separately or as part of the acquisition of a residential rental property after 9 May 2017).
However, although the new depreciation restriction will apply to ‘previously used’ assets acquired after 9 May 2017, it is important to remember that the restriction could also apply to ‘previously used’ depreciating assets acquired before 9 May 2017 (either separately or as part of the acquisition of a residential rental property).
More specifically, the depreciation restriction applies to a ‘previously used’ depreciating asset that was acquired before 7:30pm (AEST) 9 May 2017 where:
- the asset was used (or installed ready for use) for any purpose during the 2017 or an earlier income year; and
- no depreciation deduction was available in respect of the asset during the 2017 income year (e.g., because the asset was used solely for private purposes for the entire year).