Depreciation Deductions: How to Maximise Tax Returns on Your Investment Property
Most property investors don’t realise how much they can claim in depreciation deductions for investment property. It’s one of the most powerful (and underused) tools to improve your cash flow at tax time, and you don’t even have to spend extra money to benefit from it.
Let’s discuss exactly how it works, and how to make sure you’re not leaving thousands of dollars unclaimed.
What Is Depreciation (and Why Should You Care)?
Simply put, depreciation is the natural wear and tear of your property and its fixtures over time. The ATO allows you to claim this loss of value as a non-cash tax deduction, meaning you get real money back without having to actually spend anything.
There are two main types of depreciation deductions for investment property:
Capital Works (Division 43) — covers the building structure itself (e.g. walls, roof, concrete slabs).
Plant and Equipment (Division 40) — covers removable items like carpets, blinds, appliances and light fittings.
Here’s where your new best friend comes in: the Quantity Surveyor. They’re essential for preparing a professional tax depreciation schedule that complies with ATO guidelines.
New vs Old Properties: What Can You Claim?
If your property was built after 1987, you’re generally eligible to claim capital works deductions.
If it was purchased after 2017, restrictions apply to second-hand plant and equipment deductions.
But don’t assume older properties aren’t worth it. Many still qualify for significant capital works deductions that can save you thousands over time.
The Power of a Depreciation Schedule
A tax depreciation schedule is a comprehensive report prepared by a qualified Quantity Surveyor. It details the exact deductions you can claim every year, for up to 40 years.
You pay for it once. But you claim the deductions year after year.
As Duo Tax explains: “A tax depreciation schedule is a comprehensive report that details the tax depreciation deductions you can claim on the value of these assets.” Having an expert prepare this report ensures you’re maximising your deductions while remaining fully compliant with the ATO.
Common Mistakes to Avoid
Not getting a depreciation schedule at all
Assuming older properties don’t qualify
Thinking your accountant can handle it (they can’t estimate building costs, only a QS can)
Forgetting to update your schedule after renovations or new purchases
How Greycliffe Helps Our Investors Maximise Deductions
At Greycliffe Property, we flag this opportunity for every new landlord who joins us. We partner with trusted Quantity Surveyors, like MCG Quantity Surveyors, to ensure your property is properly assessed.
We’ll even coordinate with your tenants to schedule inspections, making the process completely hassle-free. It’s just one way we go beyond the day-to-day management to help you maximise your returns.
Don’t Let Depreciation Dollars Go Unclaimed
You’ve already made the biggest investment: buying the property. Now make sure you’re getting every dollar you’re entitled to at tax time.
Want to check if your property qualifies for depreciation deductions for investment property? Contact us today and we’ll connect you with the right experts to help you get started.