What Is a Property Depreciation Report?
- Propti
- Jan 19
- 3 min read
A property depreciation report is a professionally prepared document that allows property investors to claim depreciation deductions on an investment property. It outlines how much value the property and its assets lose over time and how those losses can be claimed as tax deductions under Australian tax law.
Prepared by a qualified quantity surveyor, a property depreciation report is a key tool used by accountants to ensure depreciation claims are accurate, compliant, and fully maximised.
How Does Property Depreciation Work?
Depreciation recognises that buildings and assets wear out over time. The Australian Tax Office (ATO) allows investment property owners to claim this decline in value as a deduction — even though no money is actually spent each year.
A property depreciation report calculates these deductions using two main categories:
Capital Works (Division 43)
This relates to the building structure and permanent improvements, typically claimed at 2.5% per year over 40 years.
Examples include:
Structural elements (walls, floors, roof)
Fixed cabinetry and joinery
Bathrooms and kitchens
Concrete driveways and paths
Structural renovations
Plant and Equipment (Division 40)
This covers removable or mechanical assets, each with its own effective life set by the ATO.
Common assets include:
Air conditioning systems
Hot water units
Ovens and appliances
Carpets and blinds
Smoke alarms and exhaust fans
What Is Included in a Property Depreciation Report?
A professionally prepared property depreciation report will typically include:
A site inspection (where required)
A full asset register
Capital works and plant & equipment breakdowns
Annual depreciation schedules (often up to 40 years)
ATO-compliant calculations
Quantity surveyor declarations
A Propti property depreciation report is structured so accountants can apply the figures directly into tax returns without additional interpretation.
Who Needs a Property Depreciation Report?
You may benefit from a property depreciation report if you own:
A residential investment property
A commercial or industrial property
An SMSF-held property
A new or off-the-plan property
An older property with renovations or upgrades
Even properties purchased second-hand can still generate depreciation benefits, particularly where capital works or renovations have occurred after 1985.
Do I Need a Quantity Surveyor?
Yes. The ATO requires depreciation calculations to be prepared by a qualified quantity surveyor or suitably qualified professional.
Accountants are not permitted to estimate depreciation themselves. They rely on property depreciation reports to support claims and ensure compliance.
How Long Does a Property Depreciation Report Last?
A property depreciation report generally lasts for the effective life of the property, which can be up to 40 years. Once prepared, it can be used every financial year unless:
Major renovations are undertaken
The property’s use changes
Ownership structure changes
If renovations occur, an updated report may be required to capture new assets.
Is a Property Depreciation Report Worth It?
In most cases, yes. Investors often claim:
Thousands of dollars per year in depreciation
Tens of thousands of dollars over the life of the property
Because depreciation is a non-cash deduction, it can significantly improve after-tax cash flow with minimal ongoing effort.
How to Get a Property Depreciation Report
The process is straightforward:
Provide basic property details
Arrange a site inspection (if required)
Receive an ATO-compliant depreciation report
Provide the report to your accountant
You can order a property depreciation report through Propti, with reports tailored specifically for investors, accountants, and SMSF trustees.
Final Thoughts
A property depreciation report is one of the most effective — and underused — tax tools available to property investors. Without one, you may be paying more tax than necessary each year.
If you own an investment property, a professionally prepared depreciation report should be part of your long-term tax strategy.
