Rental Property Depreciation

What is Rental Property Depreciation?

In Australia, owning a rental property can come with many responsibilities especially when it comes completing a tax return. Working out what you can claim back in tax for the year from the costs of owning the rental property can be a complex challenge.

What can I claim back in Depreciation Tax?

The law on what you can claim in rental property tax depreciation is outlined in Division 43 of the Income Tax Assessment Act 1997. Long term Rental Properties where construction commenced before the 18th of July 1985 are not eligible for depreciation tax claims however this rule is not true for all types of assessable income properties. There are two different rates stated in the ITAA 1997 document these are as follows:
  • Where construction commences after 18 July, 1985 and before 16 September, 1987 - 4% p.a.
  • After 15 September 1987 - 2.5% p.a.
When the date of building commenced refers to when the first foundations were laid and not when planning of the property started. There are also two more statements within the ITTA 1997 document which need to be met before being eligible for a rental property depreciation deduction, these are as follows:
  • For construction commencing prior to 1 July, 1997 a deduction will be allowable where, firstly, the building is currently used for an eligible purpose and secondly, where the original owner of the building at the time of construction intended to use it for a deductible purpose.
  • For construction commencing after 30 June, 1997 a deduction is dependent upon the actual use by the taxpayer in the relevant year regardless of the intended use at the time construction started.

Always consult a professional Quantity Surveyor and specialised accountant when completing a tax return referring to your rental property depreciation. They will be the best people to take into consideration all of the requirements your property needs to meet and and as required by law a quantity surveyor can best value your rental property. 

Lifetime Report:  $250 + GST


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