Tax Depreciation

What is Tax Depreciation?

The cost associated with the acquisition of capital assets, which provide benefit over their "effective life" may be written off over a period of time as tax deductions and this is essentially known as depreciation.

A property investor may claim two distinct types of depreciation on their property:
Plant & Equipment – These items are basically items that can be ‘easily’ removed from the property as opposed to items that are permanently fixed to the structure of the building. e.g. appliances, floor covering and blinds.
Building Allowance - This is based on historical building costs and includes the bricks, mortar, walls, flooring, etc.

What deductions can I claim?

All ATO specified plant and equipment items and building write-off allowance (where the building qualifies) can be claimed.

If my property was built prior to 1985, is it too old to claim?

The simple answer is no. Your investment property does not have to be new as both new and old properties will attract some depreciation deductions.  A common myth is that older properties will attract no claim. 

Can I claim renovations done by the previous owner?

Yes. Anything in the property that is part of a previous renovation will be estimated by our quantity surveyors and depreciated accordingly.  This includes items that are not obvious e.g. new plumbing, water proofing, electrical wiring etc. For capital improvements to qualify for the Division 43 construction write off allowance, they must be completed after the 27th of February 1992. 

I bought my property a number of years ago. Can I still make a claim?

You can adjust previous tax returns in the event that a property owner has not been claiming or maximising tax depreciation deductions. Generally this is the previous two tax years. Please contact your Accountant or ATO for further information.

Contact your property manager today on 02 9229 0000 if you would like us to arrange a Tax Depreciation Report for your investment property through BMT & Associates Quantity Surveyors.