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If you have a bach that you previously rented out but also used yourself then the mixed use asset rules are likely to impact the expenditure deductions that you will be able to claim.  But don’t stop reading if you don’t have a bach.  These rules will also apply to boats and aircraft with a cost of greater than $50,000.

For the bach the rules will apply from 1 April 2013.  For other assets the rules will apply 1 April 2014.  If you hold your mixed use asset in a company, then you may want to consider transferring the asset out of the company.  The rules include concessions so that the asset can be transferred out of the company without triggering depreciation recovery income.

A blog isn’t the place for a full review of these rules but in summary:

• Expense deductions will be apportioned based on the ratio of income earning use to total use (rather than the current practice of using the time the asset was available for income producing)
• The rules include some fish hooks around interest deductions in available to other group companies or individuals
• A loss from the use of an asset will be ring fenced and carried forward for use only against future income from the mixed use asset where the income generated is less than 2% of the asset’s market value

Watch out for our more detailed newsletter on this topic.