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with Tax Depreciation Schedule
Improve your cash flow and reduce your taxable income today with a professional assisting with your tax depreciation schedule. Whether you’re a residential or commercial property investor, take advantage of our $150 discount through our trusted partner, Duo Tax. Start maximising your property’s tax benefits with our expert guidance.
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What Is a Tax Depreciation Schedule?
A tax depreciation schedule is one of the most important documents an Australian property investor should have. It offers a detailed overview of the depreciation deductions available for the wear and tear of your investment property over the years. This schedule is prepared by qualified quantity surveyors and ensures you comply with Australian Taxation Office (ATO) regulations while maximising your tax benefits.
Here’s what a tax depreciation schedule typically includes:
1. Capital Works (Division 43)
- Residential Properties: Built-in wardrobes, concrete slabs, retaining walls, basins, and vanities.
- Commercial Properties: Office partitions, car parking spaces, warehouse steel framing, and kitchenettes.
Deduction Rate for Capital Works: Generally, a deduction rate of 2.5% per year can be applied for buildings constructed after September 1987. If your investment property was built before that date, deductions may be available if renovations are done after 1992.
2. Plant and Equipment (Division 40)
Plant and equipment assets are items within the investment property that can be easily removed or have a shorter lifespan than the building itself. These include items with motorised parts or those subject to frequent wear and tear, such as:
- Residential Properties: Ovens, smoke alarms, air-conditioning units, lighting, and electric garage doors.
- Commercial Properties: Coffee machines, warehouse cranes, hot water systems, and fire hydrant boosters.
Depreciation Benefits for Plant and Equipment: These are the assets that tend to lose their value much quicker and, therefore, entitle their owner to more immediate substantial tax deductions, particularly within the first five years. Depreciation rates apply according to the ATO’s Effective Life Schedule, determining the life of every asset.
Why Is a Tax Depreciation Schedule Important?
A tax depreciation schedule is important because it ensures you:
Here’s what a tax depreciation schedule typically includes:
Maximise Tax Deductions:
Increase Cash Flow
Comply with Tax Laws
How Is Depreciation Calculated?
The ATO allows two main methods for calculating property depreciation:
Prime Cost Method
Diminishing Value Method
In addition, there are instant asset write-offs for small business entities and simplified depreciation rules that may further enhance the tax benefits. Feel free to use the Rental Property Depreciation Calculator with Duo tax.
Duo Tax provides a guide on calculating depreciation using specialised tax depreciation calculators and expert assessments tailored to maximise your returns. Partner with Duo Tax today and save $150 on your tax depreciation schedule.
FAQs
Yes! Even older properties can yield significant depreciation deductions. Claiming depreciation on older properties can help reduce taxable income and increase tax refunds, making it a vital consideration for property investors across Australia.
- Building Depreciation (Division 43): Properties built after September 1987 are eligible to claim capital works deductions, typically at a rate of 2.5% per year.
- Renovated Properties: You can still claim for properties built before 1987 if substantial renovations were completed after 1992. You don’t have to complete the renovations yourself, but they need to be completed before you purchase the property.
Yes. Tax depreciation is applicable whether your investment property is rented on a short-term or long-term basis. The deductions are determined by the periods the property is available for rent. You are entitled to claim capital works and plant & equipment depreciation during the period when the property was let through Airbnb.
You can claim accelerated depreciation rates for items such as furniture, appliances, and equipment used by guests in a short-term rental property. A professional depreciation schedule will ensure you claim maximum deductions for your property.
Your tax depreciation schedule should be updated periodically to reflect any changes in the property. We recommend updating it every three to five years to help account for changes in depreciation values over time.
After Renovations or Upgrades: Whenever you make significant improvements or add new assets to your property, updating the schedule ensures these are included in your tax deductions. An up-to-date depreciation schedule will help maximise your deductions and remain ATO-compliant.
Absolutely, renovations, whether major or minor, add new assets and increase the value of your property, hence allowing for more depreciation deductions. For instance:
- Structural Renovations (Division 43): Includes upgrades like new kitchens, bathrooms, or extensions.
- Plant & Equipment Additions (Division 40): Covers new assets like air-conditioning units, appliances, and furniture.
By updating your depreciation schedule after renovations, you can claim deductions on these new elements and maximise your tax benefits.
The best times to get a depreciation schedule are:
- Immediately After Purchase: This will enable you to start claiming deductions from the first year of ownership.
- After Renovations: With upgrades, a new schedule will ensure your deductions reflect the updated value.
If you didn’t immediately receive a schedule, you can still claim unclaimed deductions retroactively in future tax returns, allowing you to recover missed opportunities.