Tax Depreciation: An Untapped Benefit for Property Investors

Owning an investment property is not just about collecting rent, it is also about making the most of the financial benefits available to you as a landlord. One of the most valuable yet often overlooked opportunities is tax depreciation.

By claiming depreciation, landlords can significantly reduce their taxable income and increase overall returns on their investment.

What is Tax Depreciation?

Tax depreciation allows property investors to claim a deduction for the natural wear and tear of a building and its fixtures over time. Just like you claim depreciation on a car used for business, you can also claim it on your rental property.

There are two main categories:

1. Capital Works Allowance (Division 43)

• Covers the structure of the building, such as walls, floors, windows and roof.
• Applies to properties built after 15 September 1987, with deductions claimable for up to 40 years from construction.

2. Plant and Equipment (Division 40)

• Covers items within the property that have a limited effective life, such as carpets, blinds, appliances, hot water systems and air conditioning.
• Each item depreciates at different rates set by the ATO.

Why Depreciation Matters for Landlords

• Boosts cash flow: Claiming depreciation reduces taxable income, which means more money in your pocket at tax time.
• Maximises returns: Even brand-new properties can deliver significant deductions, but older properties may also be eligible for partial claims.
• Long-term benefit: A properly prepared depreciation schedule can provide deductions for up to 40 years.
• Tax-deductible assessment: The cost of arranging a professional depreciation schedule is itself tax deductible

How to Access Your Depreciation Benefits

At Ray White Cottesloe | Mosman Park, we can arrange a depreciation summary for your investment property. This provides an estimate of what you may be eligible to claim.

For a more detailed evaluation, we recommend commissioning a full tax depreciation schedule. This includes:

• A site inspection by a qualified quantity surveyor.
• Identification of all claimable assets, including furniture and fittings.
• A 40-year forecast of deductions based on your property and its features.

Common Misconceptions

Many landlords assume their property is “too old” to benefit from depreciation. In reality, while older properties may not be eligible for structural deductions under Division 43, most will still qualify for plant and equipment deductions.

Another misconception is that only large-scale investors benefit. In fact, even a single investment property can deliver thousands of dollars in deductions each year.

Working With Your Accountant

A professionally prepared depreciation schedule is a valuable tool for your accountant at tax time. It ensures that you maximise your entitlements while staying fully compliant with ATO guidelines.

Tax depreciation is one of the simplest and most effective ways to improve the return on your investment property. By arranging a professional depreciation schedule, you can unlock long-term deductions that strengthen your cash flow and reduce your tax liability.

At Ray White Cottesloe | Mosman Park, we help landlords connect with trusted professionals who prepare compliant schedules and ensure no benefits are left unclaimed.

Contact us today on 08 6244 7885 to arrange a depreciation summary or to discuss how a full schedule could benefit your property investment.