Every property, is subject to wear and tear over time. This is called depreciation. Depreciation can be claimed by any property owner who obtains income from their property. While seasoned real estate investors know that they can make the most of property depreciation, new investors have little or no idea about it.

There are two types of allowances available: depreciation on Plant and Equipment, and depreciation on Building Allowance. Plant and Equipment refers to items within the building like light fittings, stove, carpet & blinds etc. Building Allowance refers to construction costs of the building itself, such as concrete and brickwork.

Plant and Equipment Example:

A dishwasher was purchased for $1,850

Dishwashers have a Diminishing Value rate of 20%

Therefore $370 is claimable in the first full year

Building Allowance Example:

A house built in 2003, cost $220,000

The building allowance applicable would be 2.5%

$5,500 is claimable for the first full year onwards

Tax Benefits of Property Depreciation 

The Australian Taxation Office (ATO) allows property investors to claim this depreciation as a deduction of their taxable income. Claiming all the depreciation property investors are entitled to on an investment property can make a significant difference to cash flow.

The Depreciation Schedule

To be able to claim tax benefit on property depreciation, you need a depreciation schedule. The amount of benefit that you can claim on depreciation is based on the depreciation schedule which is prepared by a Quantity Surveyor. They will inspect the property and its condition thoroughly to prepare a report that includes site photos and other documentation that is needed to claim depreciation.

Talk to Us

Professionals Real Estate can help you with the process involved in claiming depreciation. Contact us on 07 3846 1800 today for more information.


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