TAX DEPRECIATION SCHEDULES
Tax Depreciation Schedule
A professional Tax Depreciation Schedule can help property investors identify eligible depreciation deductions and make the most of the deductions available to them.
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What Is a Tax Depreciation Schedule?
A Tax Depreciation Schedule is a report prepared by a professional quantity surveyor. It identifies the depreciation deductions you may be able to claim for an investment property and its assets.
An experienced quantity surveyor, like Archi-QS, can review your property to identify depreciable items and estimate construction costs to prepare an accurate depreciation schedule. Your accountant or tax professional can then use this information to prepare your tax return.
Is a Tax Depreciation Schedule required?
The ATO doesn't require a Tax Depreciation Schedule, and you’re allowed to keep your own records to claim the deductions. However, calculating your depreciation deductions can be complicated, especially when you don’t have the original construction costs. A professional Tax Depreciation Schedule can also help you identify deductions that you may otherwise miss and save you time.
Eligibility
Who Can Claim Property Depreciation?
If you own a property in Australia that is used to generate income, you may be eligible to claim depreciation deductions. This can include residential, commercial or industrial properties.
Residential
Income-producing residential properties.
Commercial
Income-producing commercial properties.
Industrial
Income-producing industrial properties.
What Affects Your Eligibility?
Available deductions can vary depending on the type of property, how it is used and whether it is new or established. Renovations and new assets may also create additional depreciation deductions.
How We Can Help
As qualified quantity surveyors, we review your property, identify eligible building costs and depreciating assets, and prepare a Tax Depreciation Schedule to help you claim the deductions available to you.
Inside The Report
What Does an Archi-QS Depreciation Schedule Include?
Not all depreciation reports are equal in quality. Our depreciation report stands out as it’s meticulously prepared by registered Quantity Surveyors and Tax Agents. It includes:
Timing
When Should You Order a Tax Depreciation Schedule?
There is more than one point at which a schedule can be prepared or reviewed. These are the three most common.
- 1
Once Your Property Is Available for Rent
You can order a Tax Depreciation Schedule once your property becomes genuinely available for rent.
- 2
Even If the Property Has Been Rented for Years
You can also order a Tax Depreciation Schedule several years after your property was rented or became available for rent to find out whether you’re claiming for everything you’re eligible for.
- 3
Before or After Renovations
It can also help to speak to a quantity surveyor before carrying out renovations to your rental property. Depending on the type and extent of the changes, you may need to update your existing schedule or commission a new one to reflect the renovation and any new assets.
Deduction Types
What Can You Claim Depreciation Deductions For?
You can generally claim depreciation deductions for two types of assets: Division 43 capital works, and Division 40 plant and equipment.
Capital Works
Division 43, or Capital Works Deductions, allow property investors to claim tax deductions for the wear and tear in the structural components of a building.
Common examples
- NWalls
- NRoofs
- NDriveways
- NFences
- NBuilt-in cupboards
How Are Capital Works Deductions Calculated?
For eligible residential properties where construction started after 15 September 1987, the capital works deduction is generally calculated at 2.5% of eligible construction costs per year.
This deduction can generally be claimed for up to 40 years from the date construction was completed. For older properties, different rates may apply.
Commercial properties may also qualify for capital works deductions, depending on the building type, construction date and how the property is used to generate income.
Plant & Equipment
Division 40 deductions relate to the decline in value of eligible plant and equipment assets within the property.
Common examples
- NKitchen appliances
- NAir conditioning units
- NCarpets
- NCurtains and blinds
- NCeiling fans
- NFurniture
How Are Division 40 Deductions Calculated?
Deductions are generally based on how much value an eligible asset loses each year over its effective life. The ATO provides effective lives for many depreciating assets.
Important: established residential property
If an established residential property was purchased after 1 July 2017, generally Division 40 deductions cannot be claimed for the decline in value of existing depreciating assets that came with the property.
Side By Side
Division 43 vs Division 40
Both divisions can apply to the same investment property, but they cover different things and are assessed in different ways.
| Division 43 – Capital Works | Division 40 – Plant & Equipment | |
|---|---|---|
| What it relates to | Wear and tear of building structure and permanent fixtures. | Fittings and fixtures. These are often removable or not permanently fixed to the building. |
| Typical examples | Roofs, walls, ceilings. | Curtains, ceiling fans, furniture. |
| Depreciation treatment | Generally claimed at a fixed rate over a set period, depending on the property type and when construction started. | Deduction is based on how much value an asset loses each year over its effective life. |
| Relevant components | Building structure, permanent fixtures and eligible structural improvements. | Individual depreciating assets in the property. |
| Assessment approach | Identify the eligible construction expenditure to determine the applicable rate and period. | Identify individual assets and calculate their decline in value. |
| Key distinction | Construction date can affect eligibility, rate and claim period. | Asset-specific rules apply. Second-hand asset restrictions can affect eligibility and deductions. |
Construction Costs
How Are Construction Costs Determined?
If you constructed the property yourself, you may have records of construction costs.
If you purchased the property, or no longer have the relevant records, you cannot simply use the property’s market value to calculate depreciation deductions.
A professional quantity surveyor can estimate eligible construction costs using available information, construction data and industry standards.
No Original Construction Records? We Can Still Help.
Original records or receipts are not necessarily required for a quantity surveyor to assess eligible construction costs.
New Or Established
Can You Claim Depreciation on a New or Existing Property?
Your investment property doesn’t need to be brand new to deliver tax savings. Whether you buy off-the-plan or purchase an established property, some deductions are usually available, but the rules differ.
Newly Built Properties
Newly built properties can offer significant deductions across both Division 43 and Division 40, because they may have substantial construction costs and new depreciating assets.
Both the structure and the assets installed at completion can be assessed from the start of the claim period.
Established or Older Properties
An older property can still have depreciation deductions available. For example, you may be able to claim Division 43 deductions for eligible capital works, but you generally can’t claim Division 40 deductions for second-hand plant and equipment assets that came with the property if you purchased it after 1 July 2017.
Remember that a newly purchased property isn’t necessarily newly built. You may purchase a property that was previously owned and occupied, so its construction date, past use and renovation history can affect the deductions available.
Renovations
Can Renovations Be Included in a Tax Depreciation Schedule?
Yes, renovations can be included in a Tax Depreciation Schedule. The tax treatment depends on the type of work, when it was completed and who incurred the expenditure.
Renovations Completed by You
Eligible building improvements funded by you may qualify for Division 43 deductions. New depreciating assets such as appliances may qualify under Division 40.
Renovations Completed by Previous Owners
You may still be able to claim Division 43 deductions for eligible capital works completed by a previous owner. You don’t necessarily need the previous owner’s receipts or records. A quantity surveyor can assess the property and estimate the eligible construction costs where original records are not available.
Replacement Assets
If you replace an existing depreciating asset in your property, the new item may qualify for Division 40 deductions, subject to the applicable rules.
Co-Ownership
Tax Depreciation for Co-Owned Properties
If you own an investment property with someone else, depreciation deductions are generally divided according to each owner’s share. Co-ownership can also change how some plant and equipment deductions are treated.
Immediate Write-Offs
An eligible asset may potentially be written off immediately if an owner’s share of its cost is $300 or less.
Low-Value Pool
Assets costing less than $1,000 per owner may qualify for a low-value pool, allowing deductions over a shorter period.
Split reports for each owner
We prepare separate depreciation schedules for each owner, taking their ownership share into account and allocating the eligible Division 40 and Division 43 deductions accordingly.
Our Process
How Does a Quantity Surveyor Prepare a Tax Depreciation Schedule?
Preparing a schedule is a structured assessment. These are the six stages we work through for every property.
Collecting Property Information
We review property details, plans, contract of sale, renovation records, photographs and, where applicable, strata documentation.
Assessing the Property
We assess construction type, age, condition and finish standard using available documentation and property information. A physical inspection can be arranged where considered necessary.
Estimating Construction Costs & Asset Values
We identify eligible construction costs and depreciating assets using property details, construction data and current industry knowledge.
Classifying & Calculating Deductions
Deductions are separated into Division 43 and Division 40 and calculated over the applicable claim period.
- NDepreciation method
- NPart-year apportionment
- NLow-value pooling
- NImmediate write-offs
Applying Property-Specific Rules
We account for the circumstances that change what can be claimed.
- NSecond-hand asset restrictions
- NStrata common property
- NRenovations
- NScrapping deductions
- NCo-ownership
Reviewing & Issuing the Schedule
The completed schedule is reviewed before being issued to the property owner and accountant, setting out the methodology, assumptions and relevant legislative references.
Getting Started
What Information Do You Need to Provide?
We ask for some basic information about your property before we begin the assessment. This includes:
Property Information
- NYour name and contact details
- NFull property address
- NUnit and lot number where applicable
- NRegistered strata plan number where applicable
- NProperty type
- NNumber of bedrooms
- NGranny flat
- NPrivate pool
- NOther improvements
- NPurchase date
- NSettlement date
- NPurchase price
- NDate first available for rent
Supporting Documents
- NBuilding approvals
- NArchitectural plans
- NRenovation details and records
- NList of assets included with the property
- NExisting or previous Tax Depreciation Schedule
- NConstruction or other relevant records
These documents can help with the assessment, but you can generally still obtain a Tax Depreciation Schedule if you do not have original construction records or receipts. A qualified quantity surveyor can estimate eligible construction costs using the available property information and relevant construction data.
If you’re not sure about which documents to provide, our experts can help you through the process to make it seamless.
Working Together
How Does a Tax Depreciation Schedule Work With Your Accountant?
Your accountant uses the Tax Depreciation Schedule to include the relevant depreciation deductions in your tax return each year.
Once prepared, the accountant can refer to the schedule each year rather than calculating depreciation from scratch.
For eligible capital works, the schedule can cover deductions for up to 40 years.
Two Different Roles
Why Does Your Accountant Need a Depreciation Schedule?
Your accountant prepares your tax return, but they are not allowed to assess the property’s construction costs or prepare the depreciation schedule. That’s where a quantity surveyor comes in.
Our quantity surveyors assess the property, identify the eligible depreciating assets and construction costs, and calculate the deductions available to you. Your accountant can then use this information with your other tax details to prepare your return.
Quantity Surveyor
Assesses the property, construction costs and depreciating assets.
Accountant
Uses the depreciation information when preparing your tax return.
Qualifications
Who Can Prepare a Tax Depreciation Schedule?
A Tax Depreciation Schedule must be prepared by a professional who holds two distinct qualifications. Archi-QS holds both.
Qualified Quantity Surveyor
Construction cost expertiseThe ATO recognises quantity surveyors as appropriately qualified to estimate construction costs where the original costs are unknown (Taxation Ruling TR 97/25). This expertise is essential to calculating accurate Division 43 and Division 40 deductions.
✓Archi-QS is a member of the Australian Institute of Quantity Surveyors (AIQS).
Registered Tax Agent
Tax compliancePreparing a depreciation schedule is a tax agent service under the Tax Agent Services Act 2009, so it must be provided by a registered tax agent.
✓Archi-QS is registered with the Tax Practitioners Board (TPB).
The Archi-QS Standard
A schedule prepared without both qualifications may not withstand ATO review. Every Archi-QS schedule is prepared by quantity surveyors who are also registered tax agents. Each report combines current construction cost expertise with full tax compliance.
Why Archi-QS
Why Choose Archi-QS for Your Tax Depreciation Schedule?
At Archi-QS, we bring over three decades of quantity surveying and tax depreciation experience to every assessment.
Qualified Expertise
Our experts combine quantity surveying qualifications with tax agent registration, giving us expertise across construction costs, depreciation and the tax aspects of property investment.
Working Cost Consultancy
We are a working cost consultancy, not a depreciation-only provider. Our quantity surveyors work on live construction projects, preparing bills of quantities, cost plans and bank reports using current market construction rates. This gives us up-to-date construction cost data, rather than relying solely on library rates, helping us prepare accurate Division 43 claims.
Current Construction Cost Knowledge
We work with a wide range of property types, including residential investment properties such as houses, townhouses and strata apartments, as well as commercial offices, retail, industrial and warehouse properties, short-term traveller accommodation and specialised assets.
Wide Range of Property Types
We also have expertise in more complex cases, including landlord and tenant fit-outs, where determining who incurred the costs can affect which depreciation deductions can be claimed.
Complex Property Cases
Every schedule prepared by us clearly sets out the methodology, assumptions and relevant legislative references used in the assessment, providing a clear basis for the deductions identified.
Direct Expert Access
You and your accountant can speak directly with the professional who prepared your schedule rather than dealing with a call centre.
}3–5 Business Day Turnaround
Completed schedules can generally be received within 3–5 business days.
Questions
Tax Depreciation Schedule FAQs
Answers to the questions property investors ask us most often.
Can Archi-QS prepare a Tax Depreciation Schedule?
Yes, we have a team of qualified quantity surveyors who can assess your property and prepare a Tax Depreciation Schedule. We work across residential, commercial and industrial properties across Australia.
How long does a Tax Depreciation Schedule last?
Our Tax Depreciation Schedules cover the entire applicable period. This can be up to 40 years for capital works deductions.
Do I need a Tax Depreciation Schedule for an older property?
An older property may still have significant depreciation deductions available. Our quantity surveyors can inspect the property and identify the eligible deductions you can claim.
Can you prepare a depreciation schedule without original records for construction costs?
Yes, our quantity surveyors can assess the property and estimate the construction costs using appropriate methods and industry standards.
Do I need a new schedule every year?
No, your accountant can refer to the same schedule each year. It may need to be updated if you make significant renovations, add new assets or make changes to the property.
Is a Tax Depreciation Schedule worth getting?
A Tax Depreciation schedule can help you identify depreciation deductions to reduce your taxable income. The cost of preparing the schedule is also generally tax-deductible, making it a worthwhile investment.
How much can you save with a Tax Depreciation Schedule?
How much you can save with a Tax Depreciation Schedule depends on your personal circumstances and the property you own. However, tax savings can often run into thousands of dollars over time for many property investors.
A Tax Depreciation Schedule can help you make the most of the deductions available to you by identifying eligible costs and assets that might have otherwise been overlooked.
Ready to Understand Your Property’s Depreciation?
Speak with the Archi-QS team about preparing a professional Tax Depreciation Schedule for your investment property.