Depreciation and the Property Investor

April 02, 2015
David Thomas

Make your investment property work harder for you

Do you own an investment property?

If so, are you claiming all the appropriate taxable deductions?

One of the most commonly overlooked deductions is property depreciation.

In fact, recent research conducted by LJ Hooker found 80% of property investors fail to take advantage of property depreciation and as such, are missing out on thousands of dollars in savings. 

What is depreciation?

As a building gets older, the property and the items within it depreciate in value. 

But while the property and its items (floor covering, pipes etc) depreciates, the Australian Taxation Office (ATO) allows property investors to claim a deduction related to the building and the items within it. As such, property depreciation can be claimed as a tax deduction that essentially lowers the property owner’s taxable income so that they pay less tax. 

How can you claim depreciation? 

In order to claim property depreciation, property investors are usually required to engage with a Quantity Surveyor to complete a Tax Depreciation Schedule. 

The schedule outlines the deductions that are available to them on their property and is used by an investor’s accountant when they are preparing their tax return. 

Property depreciation is a great way to increase cash-flow on a residential property. If you haven’t claimed property depreciation in the past, but are considering doing so in the future, it is important to know the following rules: 

RULE 1: You can claim on new and old properties

An investment property does not have to be new. Both new and old properties will attract some depreciation deductions.   

RULE 2: Property depreciation lasts for 40 years

According to the ATO, buildings are able to claim deductions for 40 years. So, if an investment property is brand new, investors can claim up to 40 years of property depreciation. 

RULE 3: Renovations can be claimed

Anything in the property that occurred in a previous renovation can be estimated by a Quantity Surveyor and deductions calculated accordingly. This includes items that are not obvious, for example new plumbing, water proofing, electrical wiring or a pergola. 


For further information, and to put yourself in the best position with valuable information and guidance, contact a trusted consultant from Mortgage Choice on 07 3286 7711.  

Posted in: Property investment

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