Depreciation: a Gift to Property Investors in Australia

The Australia Taxation Office (ATO) has given huge advantages to property investors in terms of depreciation. According to Deppro QLD, commercial real estate owners should make it a point to learn all its aspects. It will help them reap the maximum benefit from depreciation. According to a report, a large number of property owners fail to claim depreciation due to the lack of awareness about it. It leads to mounting tax bills and loss to the property investors in the long run. Sometimes a person who has just relocated to Australia may not be aware of depreciation deductions fully.

Given below are some vital details that will help in boosting your knowledge about depreciation:

1. Plant & equipment:

Business houses always keep a check on their expenses and how they can be used as a tax deduction. Similarly, commercial property owners must widen their knowledge when they check the depreciable items. Therefore, all the property owners must glance inside the building. A large number of small and removable objects possessed by the landlord must be added to the depreciation schedule. It may include shelves, desks, Air Conditioning units, security systems, carpet, etc. As there will be a loss with time, it can be utilized to seek deduction against taxable income.

2. Capital allowance:

When a specific commercial property ages, the property investor is allowed to claim it as a depreciation deduction. It is interesting to note that it will remain deductible for a period of 40 years from its construction date. It is the recognized lifespan of a building. Capital allowances should ideally include the majority of a commercial property’s yearly total deduction. You may hire Deppro quantity surveyors to calculate capital allowances.

3. Claiming depreciation using the diminishing value method:

Australian property investors have specified two methods of claiming depreciation as a tax deduction. One of them is known as the diminishing value method. Investors who have opted for this method will witness an increased depreciation amount in the initial years of their investment. Investors claiming depreciation using this method will notice huge depreciation in the initial years of their investment. It is a big task to bring down the initial tax bills of the property. Diminishing refers to the depreciation on a plant that declines in value every year. Therefore, the claim also comes down every year until the asset value runs out.

4. Claiming depreciation using prime cost method:

Claiming depreciation on a rental property is essential for property investors. The prime cost method is appropriate for those investors who seek a consistent depreciation deduction every year. If a landlord gets less rental income in the investment’s initial years, they may benefit from this method. It is interesting to note that both the methods of depreciation lead to a similar total amount of depreciation. You may use the one that is most suitable for a specific investment.


You must enhance your knowledge of claiming depreciation. It will help you claiming it effectively and reducing your tax bills. Many investors like to invest in a rental property for depreciating assets for tax purposes. It is worth noting that you cannot subtract your spending on capital assets right away. But, you need to claim the cost over a period of time by reflecting the asset’s depreciation or fall in value.

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