What is a Depreciation Schedule and Does Every Investor Need One?
As property managers, one of the areas we often discuss with our rental property clients is how to minimise holding costs. One way to achieve this is to reduce your tax liability using a depreciation schedule.
Also known as a depreciation certificate, this detailed report outlines the wear and tear on your investment property and its assets over time. Once prepared and shared with the tax department, it allows you to claim tax deductions on both the building structure, known as capital works, and certain fixtures and fittings (often referred to as plant and equipment).
You will need a qualified professional to complete the report identifying all eligible components of your property, but it will be valid for several years, helping you reduce your tax bill and secure the funds you need to replace appliances and fittings as they wear out.
How depreciation works for older vs newer investment properties
A common misconception we encounter is that older properties do not offer much in the way of depreciation. While properties built before September 1987 generally cannot claim capital works deductions on the original structure, this does not mean there are no opportunities available.
However, in some cases, older homes have undergone renovations, upgrades or additions over time. These improvements, such as updated kitchens, bathrooms, extensions or outdoor structures, can still be depreciated. In addition, any new fixtures or appliances installed after purchase may also be eligible for deductions, even if the property itself is decades old.
Newer properties may present more straightforward claims, but don’t skip the depreciation certificate process if you have an older home, as it may include layers of improvements that can contribute to meaningful tax deductions.
A depreciation schedule is essential for every investment property
Having a depreciation schedule is a practical step, regardless of your property’s age. Many rental property owners are surprised by how much they can still claim, particularly when previous upgrades or structural changes are taken into account.
Without a professionally prepared schedule, it is easy to overlook eligible deductions or underestimate the property’s value over time. A thorough assessment ensures all qualifying elements, both visible and hidden, are accurately captured and applied.
Contact your property manager for referrals to qualified depreciation schedule providers.
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