What Is an Investment Property Depreciation Report?
- Propti
- Jan 19
- 3 min read
An investment property depreciation report is a professionally prepared tax document that allows property investors to claim depreciation deductions on a rental or income-producing property. It calculates how the building and its eligible assets decline in value over time and translates that into legitimate tax deductions under Australian tax law.
Prepared by a qualified quantity surveyor, an investment property depreciation report is relied upon by accountants to ensure depreciation claims are accurate, compliant, and fully maximised.
How Depreciation Works for Investment Properties
Depreciation recognises that an investment property experiences wear and tear over time, even if it’s well maintained. The Australian Tax Office (ATO) allows investors to claim this loss in value as a tax deduction each year.
An investment property depreciation report breaks these deductions into two main categories:
Capital Works (Division 43)
Capital works relate to the structure of the building and permanent improvements, usually claimed at 2.5% per year over 40 years.
Examples include:
Walls, floors, and roofing
Fixed cabinetry and joinery
Kitchens and bathrooms
Concrete slabs, driveways, and paths
Structural renovations and extensions
Plant and Equipment (Division 40)
Plant and equipment covers removable or mechanical assets within the property, each with its own effective life set by the ATO.
Common assets include:
Air conditioning units
Hot water systems
Ovens, cooktops, and appliances
Carpets and blinds
Smoke alarms and exhaust fans
What Is Included in an Investment Property Depreciation Report?
A professionally prepared investment property depreciation report will typically include:
Property assessment and eligibility review
Asset identification and valuation
Capital works and plant & equipment breakdown
Annual depreciation schedules (often up to 40 years)
ATO-compliant calculations
Quantity surveyor certification
A Propti investment property depreciation report is structured so accountants can apply the figures directly into tax returns with confidence.
Who Should Get an Investment Property Depreciation Report?
You may benefit from an investment property depreciation report if you own:
A residential rental property
A commercial or industrial investment
A new or off-the-plan property
An older investment property with renovations
A property held in an SMSF or trust
Even second-hand properties 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 rely on investment property depreciation reports to ensure claims are accurate, supported, and compliant with current tax legislation.
How Long Does an Investment Property Depreciation Report Last?
An investment property depreciation report generally lasts for the effective life of the property, often up to 40 years. Once prepared, it can be used each financial year unless:
Major renovations are completed
The property’s use changes
Ownership structure changes
If renovations occur, an updated depreciation report may be required to capture new deductions.
Is an Investment Property Depreciation Report Worth It?
For most investors, yes. Investment property depreciation reports often unlock:
Thousands of dollars per year in tax deductions
Significant long-term tax savings
Improved after-tax cash flow
Because depreciation is a non-cash deduction, it’s one of the most effective tax strategies available to property investors.
How to Get an Investment Property Depreciation Report
The process typically involves:
Providing basic property details
Arranging a site inspection (if required)
Report preparation by a qualified quantity surveyor
Delivery of an ATO-compliant depreciation report
You can order an investment property depreciation report through Propti, with reports designed specifically for investors and their accountants.
Final Thoughts
An investment property depreciation report is a critical tool for maximising tax deductions on rental properties. Without one, investors may be missing out on legitimate depreciation claims year after year.
If you own an investment property, a professionally prepared depreciation report should form part of your long-term investment strategy.
