Property Depreciation

Tax Depreciation Schedules

A Tax Depreciation Schedule (also known as a Depreciation Report or Capital Allowance Schedule) is a report used by a property investor that outlines the depreciation deductions that can be claimed on the eligible assets within an income-producing property for tax purposes.

Depreciation refers to the gradual decrease in the value of assets over time due to wear and tear. This reduction in value can be claimed as a tax deduction, reducing the taxable income and therefore the tax liability of the property owner or business.

Contact Quanto to find out how you can be utilising Tax Depreciation on your investment property to save thousands per year at tax time. Based in Newcastle NSW, Quanto can prepare Tax Depreciation Schedules for most areas of Australia.


Depreciation for Older Properties

A common misconception is that older properties are not worth claiming depreciation on. It is true that residential properties need to be built after 1987 to claim depreciation on the original structure. However, any renovations or improvements carried out after that DO qualify, even if they were built by a previous owner.

In our experience, most buildings built pre-1987 have had some improvements, whether it’s a new kitchen, bathroom or full renovation. We are experts at identifying and costing these renovations which are then included in your Tax Depreciation Schedule.

Contact Quanto today for a free opinion on whether your property is too old to have a Tax Depreciation Schedule prepared. We will not advise you to go ahead with a report that will be of no benefit to you.

Commercial Depreciation

Commercial property owners are able to claim depreciation on their properties as a tax deduction. Like residential properties, commercial properties also experience wear and tear over time, resulting in a decline in their value. This reduction in value can be claimed as a tax deduction, helping property owners reduce their taxable income and improve their cash flow.

There are many different categories for commercial depreciation.

These include:

  • Industrial Warehouses
  • Retail shops
  • Offices
  • Fuel Retailing
  • Restaurants and Hotels
  • Accommodation
  • Farming
  • Education and Health

Within a commercial property, the plant & equipment and type of construction can vary considerably depending on the industry category. Each year the ATO publish an updated, detailed list of assets (and their corresponding effective lives) that qualify as plant & equipment. This is a very detailed list that contains thousands of assets from every industry category. We review this every year to monitor any changes that may affect the commercial property owner.

Unsure about commercial property depreciation? Contact Quanto today to find out why it’s essential to have a Quantity Surveyor experienced in assessing different categories of buildings from every industry to prepare your Commercial Tax Depreciation Schedule.

Frequently Asked Questions

Why use a Quantity Surveyor for a Depreciation Schedule?

The ATO recognise Quantity Surveyors as the qualified professionals to assess building costs to be used for depreciation. While an accountant is an expert in taxation, they are not qualified to estimate building costs. Tax Ruling 97/25 of the ITA (1997) specifically states that “valuers, real estate agents, accountants and solicitors generally have neither the relevant qualifications nor experience to make such an estimate.”

Tax Depreciation is a specialised field, and Quanto are experts in this field. Quanto use our vast knowledge of constantly changing construction costs and tax legislation to ensure our clients are receiving the correct advice and tax benefits that they are entitled to.

What is the Difference between Capital Works and Plant & Equipment?

A Tax Depreciation Schedule summarises the total amount of building costs that qualify for depreciation. This is then broken up into two areas: Capital Works (Division 43) and Plant & Equipment (Division 40).

Plant & Equipment items/assets refer to removable items with a shorter useful life than the building. Because of this, they can be written off, or depreciated over a much shorter period than Capital Works. Plant & Equipment assets in residential property include items such as:

  • Carpet
  • Window Blinds
  • Appliances
  • Air-conditioning units
  • Solar Panels
  • Ceiling Fans
  • Hot Water Systems

The cost of each item is usually estimated by Quanto as qualified Quantity Surveyors unless the actual cost is known. Each item is given an effective life by the ATO that determines the rate at which it is depreciated per year.

The list of Plant & Equipment categories issued by the ATO changes every year and includes categories such as Residential Property, Agriculture, Health Care, Retail, Accommodation and Food Services just to name a few.

A full list of these categories can be found on the ATO website, or contact Quanto today and we can email you a PDF copy of the full list.

Do I need to renew my Tax Depreciation Schedule every year?

No. Quanto’s Tax Depreciation Schedules last for 40 years from your settlement date. The only reason you would need an updated report is if there is a change of ownership or if any renovations have been carried out.

Contact Quanto to find out if you need to update your report.