Property depreciation is one of the most underrated tax advantages available to Australian property investors. Put simply, depreciation lets you claim the natural wear and tear of your investment property as a tax deduction. That means more tax savings in your pocket and stronger cash flow each financial year. If you are not claiming it, you are leaving money on the table.
Building Write Off vs Plant and Equipment: What Is the Difference?
Depreciation comes in two major categories.
The first is capital works (also called building write off). This covers the structural components of your property. Think walls, floors, windows and even the roof. Properties built after 1987 are generally eligible for these deductions.
The second category is plant and equipment, which includes the things inside the property that can be removed or replaced. For example, carpets, appliances, blinds, hot water systems and air conditioning units. These items wear out over time, and the ATO lets you claim that decline in value.
Understanding both categories ensures you are maximising every legitimate claim available.
How to Get a Depreciation Schedule
To unlock depreciation benefits you will need a professionally prepared depreciation schedule. Here is how to get one sorted:
- Engage a qualified quantity surveyor, as they are one of the few professionals recognised by the ATO to calculate depreciation.
- They will inspect your property, assess eligible items and prepare a detailed schedule that outlines yearly deductions for up to 40 years.
- Hand this schedule to your accountant and enjoy the increased tax savings at lodgement time.
A well prepared schedule often pays for itself in the first year, making it one of the smartest moves an investor can make.
This article provides general information only and does not constitute financial or tax advice. Always speak with a qualified accountant or tax professional for guidance based on your circumstances.