What are the methods of depreciation? diminishing value vs prime cost

Duo Tax Quantity Surveyors provides both methods of depreciation in our tax depreciation schedules (where applicable).

These are:

  • Diminishing Value
  • Prime Cost

These methods use different calculations to determine how quickly the items in the property are depreciating. You are free to use either method but you are unable to switch between the two once you have begun depreciating. Every investor’s situation is different. Whether you’re buying a brand new property, a second-hand property, living in it or renting it out, these circumstances all have a part to play in deciding which depreciation method to use.

Given the complexity of the situation, investors would be wise to discuss their tax matters with their accountant to ensure that they’re getting the most out of tax depreciation for their investment property. At Duo Tax, our tax depreciation schedules provide both the prime cost and diminishing value depreciation schedules. They’re designed for both investors and accountants so that you can determine what is best for you.

Below is a comparison between two different methods of depreciation.

graphical comparison of prime cost depreciation methodgraphical comparison of diminishing value depreciation method

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