Can You Claim Depreciation on an Investment Property in Australia?
- 11 minutes ago
- 5 min read
Yes—many Australian investment-property owners can claim tax depreciation, but what you can claim depends on the property’s age, construction history, assets and when you purchased it.
A tax depreciation schedule is a report prepared for your accountant that estimates the deductions available over time for an income-producing property. For investors, it can identify deductions that are often missed when only standard rental expenses are considered.
At Propti, we arrange ATO-compliant tax depreciation schedules prepared by qualified quantity surveyors for residential and commercial investment properties across Australia.
What is investment property depreciation?
Investment property depreciation is a tax deduction for the gradual decline in value of eligible parts of a rental property.
There are two main categories.
Category | What it covers | Typical example |
Capital works deductions | Building structure and qualifying construction or structural improvements | Foundations, walls, roofs, doors, windows, built-in cabinetry and certain renovations |
Plant and equipment depreciation | Removable or mechanical assets that decline in value over time | Air conditioners, carpets, blinds, hot-water systems, ovens and some appliances |
A depreciation schedule separates these items, applies the relevant tax treatment and provides year-by-year figures for your accountant.
Can you claim depreciation on a second-hand investment property?
Often, yes—but the answer differs between the building and the removable assets inside it.
For many investors who bought an established residential property after 9 May 2017, deductions for previously used plant and equipment are generally restricted. That means a buyer may not be able to claim depreciation on assets such as an existing dishwasher, carpet or air conditioner that were already in the property when it was purchased.
However, investors may still be entitled to capital works deductions for eligible construction costs, renovations and structural improvements. They may also be able to claim depreciation on new eligible assets they purchase and install after acquiring the property.
This is why an individual assessment matters. “Second-hand property” does not automatically mean “no depreciation.”
What can you claim in a tax depreciation schedule?
A qualified quantity surveyor may identify eligible deductions for items such as:
Original construction and later structural improvements
Kitchens, bathrooms, built-in wardrobes and fixed flooring
Retaining walls, driveways, fencing and external improvements where eligible
New appliances, hot-water systems, air conditioners and window coverings
Renovation work completed before or after you purchased the property
Common-property components in eligible apartments, townhouses and commercial buildings
The deduction available is based on the specific asset or works, its effective life, the date it was installed or constructed, and how long the property has been used to produce income.
How does a depreciation schedule work?
A property tax depreciation schedule is normally prepared once and used by your accountant over multiple financial years.
The process is straightforward:
You provide the property address, purchase details and available building or renovation information.
A qualified quantity surveyor inspects the property or assesses the available evidence, depending on the report required.
The report identifies eligible capital works and depreciating assets.
Your accountant uses the annual figures in your tax return.
A well-prepared schedule gives your accountant a clear basis for calculating the deductions available each year.
Is a quantity surveyor required for a depreciation schedule?
The ATO allows property owners to use a suitably qualified person to estimate certain construction costs where original records are unavailable. A quantity surveyor is commonly engaged because they are trained to assess construction costs and prepare detailed depreciation schedules.
For an investor, this can be particularly useful where:
The property is older and original build costs are difficult to obtain
Previous owners completed renovations
The property has substantial improvements or external works
You own an apartment and need relevant common-property allowances considered
You want an organised, accountant-ready report rather than relying on rough estimates
Propti connects investors with qualified quantity surveyors who prepare reports designed for Australian tax purposes.
How much depreciation can you claim on an investment property?
There is no single amount that applies to every property. The available deduction depends on factors including:
Property type: house, apartment, townhouse, commercial or mixed-use
Construction date and construction costs
Renovations and improvements
Whether the property was bought new or established
Whether assets were new when you acquired or installed them
The date the property first became available for rent
The number of days it was used to earn rental income during the financial year
A new property may have significant deductions across capital works and eligible assets. An established property can still have meaningful deductions, particularly where eligible capital works, renovations or new asset purchases are involved.
Can you claim depreciation from previous years?
Potentially. If you have owned an income-producing property and have not claimed eligible depreciation, speak with your accountant about whether prior tax returns can be reviewed or amended.
A depreciation schedule can identify the deductions available for relevant years, but your accountant should confirm how they apply to your individual tax position and any
amendment period.
Is a tax depreciation schedule worth it?
For many property investors, yes. The schedule is a once-off report that can support deductions over the life of the property or until it is sold, substantially renovated or no longer used to produce income.
It is most valuable when it is based on the property’s actual construction, improvements and eligible assets—not a generic estimate. The report should also be kept with your tax records, along with purchase documents, invoices and renovation evidence.
Frequently asked questions about investment property depreciation
Can I claim depreciation if my property is old?
Yes, an older property may still have eligible capital works deductions or later renovations and improvements. The report should assess the individual property rather than assume its age determines the result.
Can I claim depreciation on a property I only rented for part of the year?
Usually, deductions must be apportioned for the period the property was genuinely available for rent or used to earn income. Your accountant can apply the correct treatment.
Can I claim a depreciation schedule fee?
The cost of preparing a tax depreciation schedule is commonly deductible in the year it is incurred, subject to your personal tax circumstances. Confirm this with your accountant.
Does an investment property depreciation schedule affect capital gains tax?
It can. Some capital works deductions claimed may reduce the property’s cost base for capital gains tax purposes when the property is sold. This is another reason to keep the schedule and discuss it with your accountant before selling.
Get an ATO-compliant depreciation schedule for your investment property
Whether you own a newly built apartment, an established rental home, a renovated townhouse or a commercial property, Propti can help arrange an accurate, ATO-compliant tax depreciation schedule.
Our reports are prepared by qualified quantity surveyors and give you and your accountant a clear year-by-year view of eligible property depreciation deductions.
Book a tax depreciation report with Propti to understand the deductions your investment property may support.
