Tax Depreciation FAQs

As a team of property investors ourselves, we understand that every dollar counts. Having your own property is a dream that many Australians are working hard towards. Investors toil away for years to put away savings on a deposit for their first property purchase. Duo Tax Quantity Surveyors are Australia’s most reviewed and highly-rated Quantity Surveyors. As the country’s fastest-growing property tax depreciation service, thousands of investors have entrusted us to help them maximise their tax deductions each year.

Typically, if you’ve held the property for at least 12 months, or plan to, it is worthwhile claiming depreciation. It’s always best to confirm with your accountant before making the claim.

First, you need to qualify the property; give us a call, and we will ask you a few simple questions to qualify your investment property.

Second, you order a schedule via our web form or over the phone, and we will begin preparing your depreciation schedule.

Third, we will deliver your personalised depreciation report to you and your accountant within 5-10 business days. Your accountant can review the report and determine which deductions you may be eligible to claim.

You should update your depreciation schedule whenever you make significant changes or improvements to your investment property. This ensures that your schedule remains accurate and up-to-date and that you claim all the deductions you’re entitled to. We recommend reviewing your schedule every 3-5 years or after any major renovations.

The time it takes to prepare a depreciation schedule depends on the property’s complexity and the information availability. At Duo Tax Quantity Surveyors Parramatta, we pride ourselves on our quick turnaround times and efficient service.

We can usually deliver your depreciation schedule within days of conducting the site inspection.

Ideally, you should engage a quantity surveyor to prepare your depreciation schedule as soon as possible after purchasing your investment property. This ensures you can start claiming deductions from the first year of ownership. However, getting a depreciation schedule is never too late, as you can still claim unclaimed deductions in future tax returns.

The cost of a depreciation schedule varies depending on the type and size of your investment property and the complexity of the assessment. At Duo Tax Quantity Surveyors in Parramatta , we offer competitive pricing and excellent value for money.

Contact us for a free quote tailored to your specific needs.

Quantity surveyors are recognised by the Australian Taxation Office (ATO) as qualified professionals who can assess the value of your investment property and prepare a compliant depreciation schedule.

We have the expertise and knowledge to ensure you claim all the deductions you’re entitled to, boosting your tax savings.

Fortunately not, our tax depreciation schedules will last the full 40 years of depreciation (where applicable). So, you only need to purchase one for each investment property you own. We make sure to capture all the depreciation available to you. If you have lost your schedule, email us, and we can send you another copy.

Quantity Surveyors are considered economists of the building sector. As accountants are unable to determine the cost of construction, it is then left up to the quantity surveyor to provide these estimates of cost. Naturally, then, they are in the best position and are trusted to provide reports.

Whether your property is in the heart of the city of Sydney or as interstate as the Great sandy desert, we can depreciate your property. We service Australia-wide with surveyors in every state. Call us on 1300 185 498 if you feel like it would be a problem for us to complete your report, and we will be happy to discuss details before proceeding with your purchase.

Yes, click below to order a tax depreciation schedule.

Order a Tax Depreciation Schedule

It is a common misconception that existing properties do not yield any worthwhile depreciation. At Duo Tax, we are actively educating investors on the relevant laws and tax deductions available within investment properties and find that the above is not always the case. The ATO allows you to claim building depreciation (division 43 – capital works) on all residential investment properties built after September 1987.

If built before 1987, there still is a chance to claim depreciation if the property was renovated after 1992. The plant & equipment (division 40) is only claimable on older properties if you purchased the property before the 9th of May 2017 and rented it before the 1st of July 2017. You can use our calculator to receive a rough estimate of how much you can receive if you are able.

You may be able to claim depreciation for eligible assets and capital works in a property used for short-term rentals. Eligibility and the amount claimable depend on rental use, genuine availability for rent, any private use and the applicable rules. Our team can help identify potential depreciation deductions for your accountant to review.

You may be able to claim depreciation on renovations and improvements to your investment property, depending on the work, when it occurred, who incurred the expenditure and how the property is used. If you have recently renovated, our team can help update your depreciation schedule to identify potential deductions for your accountant to review.

You may be able to claim depreciation on older investment properties, depending on construction dates, renovations, ownership and use. Separate eligibility rules apply to capital works and plant and equipment, including restrictions on second-hand assets in residential rental properties. A quantity surveyor can assess the property for potential deductions, which your accountant can review.

Yes, Duo Tax can prepare a tax depreciation schedule for your overseas international investment property provided it was built after 1990.

If you convert your first home to an investment property, you may become eligible for depreciation deductions once the property is genuinely used or available to produce assessable income. Eligibility depends on the property, its assets and the applicable rules, including restrictions on previously used residential assets. Confirm the treatment with your accountant.

You may be able to claim depreciation for eligible commercial assets or capital works used to produce assessable income. If you lease business premises and have completed a fit-out, we can help identify potential deductions for your accountant to review. Speak to your accountant for advice suited to your circumstances.

If you are an overseas investor and looking at acquiring an investment property for the purpose of letting it out to tenants, by law, you must lodge an Australian tax return. As such, a depreciation schedule will work favourably for you. Speak to an accountant for clarification on your tax obligations.

We have created a simple tool for investors to use to determine if you can claim tax depreciation, including an estimate of how much you may be entitled to.

Rental Property Depreciation Calculator

Remaining capital works deductions for qualifying renovations completed by a previous owner may be available, depending on construction dates, the remaining deduction period and how the property is used. Separate rules and restrictions apply to second-hand plant and equipment in residential rental properties. Ask your accountant to confirm which deductions may be available in your circumstances.

Before demolishing a building or removing items such as kitchen fittings and appliances, contact us to document any remaining tax values for your accountant to review. Depreciating assets may be subject to balancing adjustment rules, while destroyed capital works have separate eligibility requirements. The outcome depends on ownership, income-producing use, previous deductions and any sale proceeds or insurance payments. Removal or demolition does not automatically create an immediate deduction. Your accountant should confirm whether a deduction is available, its amount and the income year in which it may be claimed.

If you’re wondering whether your property has undergone renovations and if those renovations are eligible for depreciation claims, a professional assessment by a Quantity Surveyor is essential. They can evaluate your property to identify any renovations and determine the age of those improvements. You may be entitled to claim depreciation on renovations or fit-outs, even if you were not the one who completed them. Importantly, subsequent owners can also claim depreciation on second-hand or existing buildings and improvements.

To get a professional assessment of your property’s renovations, reach out to us today!

Depreciation is the wear and tear that occurs as things get older. As items get older, the value of these items also decrease in value. This is called depreciation. When it comes to your investment property, these items are classified as either Plant and Equipment or Capital Works. The wear and tear of either plant and equipment or building in an investment property is called tax depreciation. Eligible investors may be able to claim depreciation deductions. Any effect on a refund depends on the investor’s overall tax position. The ATO prescribes two methods – prime cost method or diminishing value method. Both that can be used to claim on your property depreciation.

A tax depreciation schedule is a detailed report that outlines the depreciation deductions you can claim on your investment property. It includes a breakdown of the building allowance and plant and equipment depreciation, as well as the estimated deductions you can claim each year over the life of the property.

The salvage value, also known as residual or scrap value, is the estimated value of an asset at the end of its useful life. It represents the amount you expect to receive when selling or disposing of the asset after it’s fully depreciated. It is important to note that intangible assets, such as intellectual property, are typically excluded from being considered depreciating assets according to ATO guidelines.

When calculating depreciation, the salvage value is subtracted from the asset’s initial cost to determine the total amount that will be depreciated over the asset’s useful life. You must estimate the salvage value accurately, as it impacts the annual depreciation expense.

Calculating your annual rental depreciation involves determining the asset’s cost, its estimated useful life, and the method you’ll use (e.g., straight-line or declining balance). Additionally, the timing of the asset’s purchase within the fiscal year can affect the calculation, requiring adjustments for partial year depreciation. For investment properties, you’ll also need to consider the building’s age, the value of fixtures and fittings, and any renovations. It’s advisable to use tools like a Tax Depreciation Calculator or consult with a quantity surveyor to ensure accuracy and maximise tax benefits.

The ATO prescribes two methods to calculate depreciation:

• The prime cost method: under the prime cost method, also known as the straight-line depreciation, you calculate the decrease in value of an asset over its effective life at a fixed rate each year.
• The diminishing value method: under the diminishing value method, also known as the declining balance depreciation method, you claim depreciation at a higher depreciation rate in the first few years of property ownership. As a result, the depreciation deduction value will decrease each year until the asset value runs out. Using low-value pooling, you can also increase the claim on items valued below $1,000. A Duo Tax Depreciation Schedule will automatically take all this into account for you.

The Federal Government legislated new laws for properties purchased after the 9th of May 2017 that ultimately affect depreciation claiming for second-hand plant & equipment (division 40).*

Brand new properties rented immediately are not affected. The plant & equipment in a property must now be brand new and never used before (and the property rented prior to the 30th of June 2017 if purchased second-hand) to be eligible to claim for depreciation. If the property is purchased second-hand after the 9th of May 2017, you cannot claim any of the existing depreciation in the property. However, any brand new items you install in the property for rental purposes will be claimable, provided the item was installed after moving out of the property.

The second scenario is where you purchased a brand new property; if you lived in the property for any amount of time before renting, the plant & equipment items inside are now considered second-hand and, therefore, no longer eligible to be claimed.

*Does not affect the company or managed funds.

Division 40 is the category which covers assets that are easily removable from a building rather than attached or fixed. These include appliances and furnishings. Each item of plant or equipment within your property has an effective life measured in number of years. The effective life is determined by the tax commissioner under the latest Taxation Ruling. It is used to calculate the assets decline in value.

Division 43 is the category which addresses the building write-off component of your property. The historical construction costs include fees for preliminary items such as design fees, engineering and building approval costs. Where actual costs are not known, a quantity surveyor has estimated this amount by determining the appropriate costs for the building/structural improvement of the asset as at the date it was constructed. The percentage rate at which the building depreciates is dependent upon when construction commenced and the intended use of the building for i.e. commercial, manufacturing or residential purposes. This percentage will either be 2.5% or 4% and has been applied accordingly with respect to the information provided to us.

Scrap value, otherwise known as remaining value, residual value or salvage value, is calculated differently and would require our team to provide you with a free estimated amount of how much depreciation you could potentially claim before your renovation or knockdown of the property.

The term “plant and equipment” refers to the specific assets, fixtures, and fittings that are found within investment properties and are generally easily detachable from the property. The ATO recognises more than 6,000 different assets that investors can claim tax deductions on.

Here are some items that are considered plant and equipment fixtures:

RESIDENTIAL	COMMERCIAL
Oven, stovetop and rangehood	Fire hydrant booster
Air-conditioning units	Billi hot water unit
Smoke alarms	Door closers for door struts
Downlights	Coffee machine
Electric garage door & remotes	Warehouse cranes & hoists

Our general understanding is that you don’t directly “pay back” depreciation deductions. Depreciation that is claimed on the property reduces your property’s cost base i.e. if your property is purchased for $500,000 and you claim $10,000 in depreciation, your property value is now $490,000 and hence a sale of the property at $500,000 is indeed a capital gain of $10,000, not break even. If you have owned the property for more than 12 months as an individual or similar entity, you’re eligible for a 50% Capital Gains Tax (CGT) discount, meaning you only pay tax on half of the calculated capital gain. Typically, the overall cash-flow benefits from claiming depreciation outweigh any additional CGT payable at sale. Always remember tax depreciation is a cash flow tool, and the tax deduction up front enables investors to get ahead (by leveraging on the cash flow), despite having to pay back 50% only when the property is eventually sold, if sold at all. This information is general only in nature and should not be relied upon. We encourage property owners to seek advice from professionals such as an accountant or financial advisor.

Not all properties are purchased at the start or end of the fiscal year to make for an easy depreciation estimate. This means that your first-year estimates may be slightly different to a real tax depreciation schedule’s figures because you’ll only claim partial-year depreciation instead of for a full year.

In order to determine the age of your property, you can start by contacting your local council, as they often have records of property details, including the build year. Additionally, searching your property address on Google may yield results from real estate websites that list this information. If you still cannot find the build year, Duo Tax has access to comprehensive real estate databases that can help retrieve the year your property was constructed. In cases where the build year remains elusive, a qualified Quantity Surveyor can provide an estimate of the build year and assess any unknown construction costs.

For assistance in determining your property’s age, feel free to contact us.

The depreciation calculator should be used more as an indication as opposed to a final accurate figure. However, we’ve strived to make this property tax depreciation calculator as accurate as possible according to the available data we have, based on the thousands of properties we’ve inspected.

We find that many investors use this for research purposes to find out the first-year and second-year depreciation deductions and then contact us directly to get a more accurate estimate if they believe there are ample opportunities for tax depreciation claims.

Unfortunately, no, you can’t claim these figures as depreciation deductions. According to the Australian Tax Office (ATO), your property must be surveyed and evaluated by a qualified quantity surveyor. While we try to keep the tax depreciation calculator as robust and comprehensive as possible, it does not replace a qualified quantity surveyor.

The calculator will calculate the depreciation estimate based on a series of data points from our comprehensive database and compare this with similar properties to give you an approximate depreciation value for your investment property.

The ATO prescribes two methods to calculate depreciation.

1. The Prime Cost (straight line) Depreciation Method 

Under the prime cost method, also known as the straight-line depreciation, you calculate the decrease in value of an asset over its effective life at a fixed rate each year.

2. The Diminishing Value Method 

Under the diminishing value method, also known as the declining balance depreciation method, you claim depreciation at a higher depreciation rate in the early years of ownership of the property. As a result, the depreciation deduction value will decrease each year until the asset value runs out. You can also increase the claim on items valued below $1,000 using low-value pooling.

The asset calculator uses both the diminishing value and prime cost method to give you an estimate of what you can claim on a depreciating asset, construction costs or capital allowance.

It’s important to understand that these are only estimates for your investment property’s capital works allowance and plant and equipment assets. So, the final claimable depreciation amount is subject to change.

The Rental Property Depreciation Calculator is designed to provide investors with first-year and second-year estimates of how much they can likely claim depreciation deductions on their residential property or commercial investment property. This will give you a good gauge of whether purchasing a tax depreciation schedule is worthwhile.

Alternatively, you can contact us to get a free estimate of your depreciation amount and quote for your depreciation schedule.