Impact of Amendment on Housing Market

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Added on 2020-02-18

Impact of Amendment on Housing Market

Added on 2020-02-18

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Taxation law Semester 2 2017

TABLE OF CONTENTSIntroduction................................................................................................................................3Amendment in law.....................................................................................................................3Rationale for this restriction.......................................................................................................3Impact of amendment on housing market..................................................................................5Conclusion..................................................................................................................................5References..................................................................................................................................7

INTRODUCTIONAs per recent law, travel expenses regarding inspection, maintenance and collectionof rent of rental property will not be allowed (Li & Whitworth 2016). This amendment hasbeen done with the objective to develop reliable method to deal with the concerns thattaxpayers claim deductions of travel expenses without correct allocation cost, or havingclaims of travel costs for private purpose of travel. The present study is based on anevaluation of recent amendment provided by budget in Australia regarding disallowance oftravel deductions. The study will include a description of the amendment and its justification.In addition to this, the impact of this amendment will be stipulated on the housing market ofAustralia.AMENDMENT IN LAWPrevious legislation regardingtravel and car expensesIf an individual travels in order to examine or property maintenance or accumulatingthe rent, they might be capable of claiming the travelling considering as a deduction. Theyare legally permitted to take a total deduction in which the only reason for the trip isregarding the rental property (James, 2016). Conversely, in, certain circumstances individualis unable to claim a deduction or may be allowed to do deduction partly because the trip wasfor multiple purposes. However, if an individual gets a flight to the rental property, staysthere all night and return back home on a particular date, all the hotel and airfare expenseswill usually be accepted as a deduction for the only reason of the trip that was to examine therental property. Proposed Law: prohibits the travel expense deduction for housing rental propertyBy considering the initiative dubbed “Reducing pressure on housing affordability”, ithas been announced by the Federal Budget 2017-18, from 1 July 2017, Government willprohibit travel expense deduction regarding inspection, maintenance or accumulation of rentfor a housing rental property (Source: Budget Paper No 2 [p 29]). This measure is alsoapplicable to gather rent on a particular housing property (Bayes and et al., 2016). Byconsidering the concerns of Federal Government, as per this change residential investmentproperties owners might claim travel expenses without the proper allocation of costs or haveclaims of travel costs for a private purpose, and travel costs regarding inspection,

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Impact of Amendment on Housing Market