What is a Property Tax Depreciation Schedule?

A depreciation schedule is a detailed report that showcases the wear and tear of your investment property over time. It allows you to claim tax deductions for the decrease in value of your property’s assets, which can include the structure of the building and various fixtures and fittings (e.g., carpets, rugs, appliances, and heating and cooling systems). Tax depreciation schedules can be prepared for both residential and commercial investment properties.

If you’re wondering why you should apply for a depreciation schedule, by claiming depreciation, you’ll be able to save thousands of dollars, which can improve your cash flow and ultimately add more cash to your pocket. To make things easier, we’ve broken down everything you need to know—from how much it costs to how much you could save—to help boost your tax deductions on your investment property.

Property depreciation simply explained

Watch this video to learn how property tax depreciation works and how a tax depreciation schedule will help you:

Property Depreciation Explained - How Property Investors can benefit with a Depreciation Schedule

How are tax depreciation schedules calculated?

Australian tax depreciation schedules are calculated by determining the building’s original construction cost and the assets’ plant and equipment costs. However, to claim depreciation, you need to order a depreciation schedule from a quantity surveyor who is backed and accredited by the Australian Taxation Office.

A residential tax depreciation schedule, for example, might show that the original construction cost for a house was $250,000. Two categories separate the depreciation deductions:

  1. Division 43: Capital Works/Building Allowance
  2. Division 40: Plant and Equipment

Let’s say the Capital Works Allowance component makes up $220,000 of the $250,000 total cost. This includes structural elements, such as roofing, shower screens or windows. Investors are eligible to claim this cost at 2.5% per annum.

The plant and equipment, totalling the remaining $30,000, cover items like cooktops, exhaust fans, and window curtains. These depreciable assets typically depreciate faster based on their effective lives.

How much does a depreciation schedule cost?

Depreciation schedules for residential properties vary depending the type of property, location and whether an inspection is necessary.

The best way to work out how much a depreciation schedules costs is to get a quick quote below:

Get a Free Depreciation Quote Now

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How much can I save by getting a depreciation schedule on my property?

For an accurate estimate of your investment property’s depreciation, try our free depreciation schedule calculator:

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Depreciation Schedule Calculator

FIRST 10 YEAR TOTAL CLAIM

$35,234

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Why should I use Washington Brown’s depreciation schedule services?

Well our reviews are a testament to our success – you can review our live Trust Pilot reviews here:

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Why are tax depreciation schedules required?

Tax Depreciation Schedules

Legally, in order to claim depreciation on your investment property and decrease your taxable income, you require a depreciation report.

To claim depreciation in an ATO compliant way, you need to order a depreciation schedule from a quantity surveyor.

Washington Brown, established in 1978, is among the longest-standing and highly respected quantity surveying firms in Australia.

Furthermore, when you arrange a tax depreciation consultation with us, our quantity surveyors will assess whether an inspection is necessary for your investment property and expedite the process promptly.

Our property depreciation schedules are based on three crucial pillars:

  • accounting experience
  • construction industry knowledge
  • detailed understanding of property related tax law

Frequently Asked Questions

  • Not understanding the importance and positive outcomes of a QS carrying out the report

    Tax Depreciation Schedules for Rental Property
    There are little things that can make a big difference to your deductions. For example we start your report from the settlement date, (other companies) do a generic full year so you are pro-rating items under $300 and Low pooled items by how long you own them. This is incorrect and the items should be claimed at 100% and 18.75% whether you own them for 1 day or 365 days of the 1st year.

  • Worried your proceeding with a report that might not be worthwhile?

    The initial stage of the report process involves our team looking over the information received and reviewing whether or not it’s worth your while. Our mission is to provide our clients with a good return on their investment and be satisfied with the result. Our guarantee to you is if we don’t save you twice our fee in the first year, your report will be FREE.

  • Information on the rental property too hard to get your hands on?

    That’s fine, simply provide the information that is available to you and leave the rest for the expertise of our customer service team and qualified QS to find the information for you e.g. RP data. Any uncertainties, one of our Quantity Surveyors will personally discuss with you.

  • Why can’t a QS estimate renovation work if the costs are known?

    It is an ATO requirement that if the costs ARE KNOWN then the information must be provided. In the case where you cannot provide the information (as we know everyone’s situation is different), we ask you provide the renovations details best to your knowledge.

  • Washington Brown seems too expensive compared to cheaper companies

    In a sense, it’s like using the cheapest builder, or the cheapest accountant. We send out qualified staff and try and get you every legitimate deduction you are entitled to. We are ATO compliant and in the short term you might be saving a few hundred dollars though in the long term you could be missing out on thousands of dollars which YOU are entitled to, simply because we are good at what we do.

  • My Rental Property is really old – how can there still be depreciation left to claim?

    A misconception is that if the rental property is older than 1987, an investor can not claim any depreciation. The tax deductions are higher on a newer rental property but are still available on most investment properties due to the renovations on older properties that’s allowed to be claimed.

  • How far can you backdate your tax?

    Yes you can backdate up to 2 years from the last time you submitted your last tax return.

  • can you claim on renovations that previous owners have carried out?

    Yes – when inspecting the rental property, we take into account all renovations that may have been carried out to the property and then estimate for the depreciation you are eligible to claim for.

  • Can you claim depreciation on an overseas property?

    No matter where your property is in the world, you can claim depreciation if you are an Australian tax payer. We have serviced such countries as New Zealand, USA, Indonesia, UK.

  • Why use a Quantity Surveyor to prepare my tax depreciation schedule and not an Accountant?

    As stated in the Tax Ruling 97/25 issue by the Australian Taxation Office (ATO), your accountant is not allowed to prepare a tax depreciation schedule if the property is newer than 1987. If older, they can carry out the report, though at what expense? They will not be inspecting your rental property and you may miss out on major deductions which we can guarantee, as Quantity Surveyors we make sure you claim every cent you are eligible to.

Get a quote for a property tax depreciation schedule on your rental property – or use our free property tax depreciation calculator to work out your potential cash flow tax saving.

Washington Brown’s fee is 100% Tax Deductible.

Do you have any tax depreciation schedule case studies?

To view examples of some of our Residential and Commercial client’s claims, you can read the following case studies:

Jenny saved $3,330 on her tax bill by claiming depreciation on her newly built granny flat.

Read how Paul saved $6,263 on the first year’s depreciation claim for his office building.

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