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Schedule tax depreciation into your return

Each year it seems that the Australian Taxation Office (ATO) announces its resolve to target a particular area of taxation.

This year, the ATO have indicated they will be ramping up investigations into rental property deductions for owners of residential property.

The crackdown may pertain to a variety of deductions, but one of particular relevance for income-producing property owners is tax depreciation deductions.

Research suggests that eighty per cent of investors still don’t maximise the deductions they can claim from property depreciation. Yet the average deduction investors can claim in the first full financial year is around $5,000 to $10,000.

The deductions claimed from depreciation can make a significant difference in boosting a property investor’s cash flow, so it is important that investors consider speaking with a specialist Quantity Surveyor who specialises in depreciation to request a tax depreciation schedule. Investor’s who don’t seek expert advice place themselves at risk of an audit by the ATO which could lead to additional costs and cause unnecessary issues.

So what is property depreciation you may ask? Depreciation is a deduction due to the wear and tear of the structure of the building and the fixed and removable assets contained within it. Investor’s can claim capital works deductions for items of a structural nature and depreciation of the plant and equipment assets for any income producing property.

The ATO does place some restrictions on claiming capital works for properties in which construction commenced prior to the 15th of September 1987. However, deductions for plant and equipment are not limited by age. It is the condition and quality of each item which contributes to the depreciable amount. It is always worth the enquiry to discuss the deductions any property has available. Particularly as often older properties have had renovations completed which may also entitle the owner to deductions, even if these renovations were completed by a previous owner.

For investor’s who haven’t arranged a depreciation schedule for their investment property, don’t despair, the previous two financial years can be adjusted if you have not been claiming depreciation. The fee to arrange a tax depreciation schedule is also 100% tax deductible; so it’s a win, win situation for investors.

Property investors can download a free tax depreciation calculator to get a detailed estimate of the depreciation deductions available for any property. To download the app for iPhone or Android phone, simply click here.

Alternatively, you can speak with one of the friendly staff at BMT Tax Depreciation for obligation free advice on 1300 728 726 today.


Article provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation. 
Please contact 1300 728 726 or visit for an Australia-wide service.

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