When Is a Depreciation Schedule Worth It?
When should you order a depreciation schedule for your investment property? The answer depends on the property type, age, and upgrades.
What Is a Depreciation Schedule?
A depreciation schedule is a report prepared by a quantity surveyor. It outlines the value of a property’s building and assets so you can claim tax deductions each year. As items wear out, you legally reduce your taxable income and improve cash flow.
What Changed in 2017?
In May 2017, tax rules changed. Investors can no longer claim depreciation on used plant and equipment in residential properties. However, you can still claim building allowance under the right conditions.
New vs Existing Properties
If you buy a new property, you can claim the full depreciation benefits. About 38% of investors fall into this category.
If you buy an existing property, the outcome depends on the build date and renovations.
Properties Built After 1987
Most properties built after 1987 qualify for building allowance. Around 69% of investment properties fall into this category.
Key takeaway: If the property was built after 1987, a depreciation schedule is usually worth it.
Properties Built Before 1987
Older properties do not qualify for original building allowance. However, renovations can still unlock depreciation benefits.
If the property has at least $40,000 in upgrades such as a new kitchen, bathroom, or extensions, you can often claim deductions.
Key takeaway: Renovated older properties can still benefit from a depreciation schedule.
Is It Worth It?
In most cases, yes. Studies show that around 83% of properties benefit from a depreciation schedule. It reduces holding costs and helps you manage your investment more efficiently.
What Should You Do Next?
If you are unsure, speak with a qualified quantity surveyor. They can quickly estimate whether a depreciation schedule will deliver value.
Learn more about property or shares? what is the best investment? or explore our free investor tax guide to maximize your returns.
For official tax guidance, visit the Australian Taxation Office.
