Understanding Depreciation Schedules: A Guide by Reliance Real Estate 

May 15, 2024

Depreciation is one of the most advantageous tax breaks available to property investors, but to benefit from it, you’ll need a depreciation schedule. In this blog, we’ll explain what a depreciation schedule is and how to create one to help you save money. 

What Can I Claim Through Depreciation?

Investors can generally claim two types of depreciation allowances: 

  1. Building Allowance: This deduction applies to the building structure, such as concrete and brickwork, and is also known as the building write-off. 
  1. Plant and Equipment: This allowance covers removable items within the building, such as ovens, dishwashers, carpets, and even garbage bins. 

Properties constructed after July 1985 qualify for both types of deductions. However, even if your property was built before this date, you can still claim plant and equipment depreciation, potentially leading to substantial savings. 

What Does a Depreciation Schedule Include?

A depreciation schedule is a comprehensive document that includes: 

  • A breakdown of all building allowance costs. 
  • A breakdown of all plant and equipment costs. 
  • The rates at which you can claim different items and their estimated effective lifespan. 
  • An annual breakdown of how much you can claim based on the financial year-end. 

A thorough report will also provide depreciation details for plant and equipment using two methods: the diminishing value method and the prime cost method. These methods offer different ways to claim depreciation on your assets based on your individual needs. 

How Do I Get a Depreciation Schedule?

To create a depreciation schedule, you need to arrange a site inspection with a qualified quantity surveyor if your investment property was built after 1985 or if the construction costs are unknown. This is a requirement by the ATO. 

During the inspection, the quantity surveyor will measure, document, and photograph all qualifying items, ensuring you don’t miss any deductions. They often identify deductible items you might not have considered. 

When Should I Have a Depreciation Schedule Created?

The ideal time to create a property depreciation schedule is immediately after you settle on a property. Doing this right after settlement ensures the most accurate values and minimises disruptions for any tenants moving in. Additionally, you should prepare a depreciation report before and after any scheduled renovations on income-producing properties, as these renovations can lead to significant tax deductions. 

The cost of preparing a depreciation report varies depending on the type of property, its location, size, and other factors. However, don’t let costs deter you. Many reputable quantity surveying companies offer a money-back guarantee, and the fees are 100% tax-deductible. You have nothing to lose and potentially thousands to gain. 

For more information, get in touch with your local Reliance team for personalised advice on maximising your property investment returns. 


Information as referenced from 

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