Everything you need to know about rental property depreciation schedules

rental property depreciation

Once you’ve bought the perfect investment property and found the right property manager, there’s one other critical element to consider – depreciation.

Thousands of dollars go unclaimed by rental property investors each year, so it pays to know your entitlements come tax time.

What is property depreciation?

Anyone who purchases an investment or rental property is entitled to claim the depreciation of both the building and its contents against their taxable income. There are two types of available allowances. The first is depreciation on building allowance, which includes the construction costs of the building itself, such as timber and concrete. The second is depreciation on plant and equipment, which refers to fixtures and items within the building, such as carpets, ovens and blinds. You can offset all of these costs against your taxable income by supplying the ATO with a property depreciation schedule.

How do I get a depreciation schedule?

A qualified quantity surveyor will need to inspect your property and prepare a schedule for your accountant. The process usually takes around two to three weeks and is best organised right after property settlement and before a tenant moves in to avoid as much disruption as possible.

Can’t I just get my accountant to prepare it?

Accountants are not permitted to estimate the construction costs of buildings constructed after 1985. Even for older buildings, it’s prudent to hire a qualified quantity surveyor to estimate your construction costs. While accountants can advise you on tax depreciation in general, quantity surveyors are specialists in measuring construction costs and property depreciation and will ensure you receive truly accurate figures on which to base your property tax depreciation schedule.

How exactly will I benefit from a property depreciation schedule?

It will maximise the tax savings on your investment, meaning you pay less tax. The depreciation benefits will of course vary depending on your type of property, its use and age. But remember, depreciation is a non-cash deduction, so this means you don’t need to spend any money in order to claim it.

Are all properties eligible for property depreciation claims?

All income-producing properties are eligible to have their assets depreciated. Owners of buildings built after July 1985 can claim both the building allowance and plant and equipment. If property construction began before this date, you can still claim plant and equipment. Renovated properties are also eligible – you’ll just have to specify how much you spent on renovations. Industrial and commercial properties have their own specific cut-off dates.


Choose a team who will help you protect and grow your property portfolio. Contact property management experts K.G. Hurst today.

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