Significant Things You Should Not Overlook While Estimating Tax Depreciation

As a building structure items inside it begin to age, which means that they depreciate in their overall value as well. The Australian Taxation Office (ATO) has permitted all the property investors to claim this depreciation as a tax deduction. A property investor must estimate his depreciation for tax purposes in a precise manner. These tax deductions help in bringing down the property owners’ taxable income so that they may pay a lesser amount of tax. You can claim depreciation on the structural elements of the property along with removable plant and equipment objects, fixtures, and fittings.

Why Should I Consult a Quantity Surveyor?

It is suggested that an investment property owner gets in touch with a quantity surveyor as they will help in preparing a tax depreciation schedule before filing the tax return claims. Quantity surveyors have emerged as the most well recognised and equipped experts who have secured the right construction costing skills. Additionally, they can assess your tax depreciation as per investment property depreciation schedule ATO rules. They have the authority to assess the cost of the objects for the purpose of depreciation. They have also been qualified by the ATO under Tax Ruling 97/25. Investors must secure services of QS who got affiliation with industry controlling bodies like The Royal Institute of Chartered Surveyors, Australian Institute of Quantity Surveyors, etc.

The Difference between Diminishing Value Methods and Prime Cost

Diminishing Value methods and Prime Cost are two methods of estimating tax depreciation. You may use these two ways to calculate depreciation on assets. If you opt to use the diminishing value method, deductions will be calculated as a percentage of the remaining value of every item. It will let investors claim a higher portion of an asset’s costs sooner. Meanwhile, in the prime cost method, deductions will be assessed in the form of a percentage of the cost. When this method is chosen it will permit investors to claim little deductions over a long period of tenure. The strategy of the investors will decide which method to opt for.

The Significance of Tax Depreciation Schedule

An effective depreciation schedule for investment property is prepared by an expert quantity surveyor. He has earned a specialisation in depreciation. This will include things like a method statement; capital works allowance, schedule of pooled objects for the property, a comparative table of two depreciation methods, etc. It will also consist of a vast forty-year forecast table highlighting all depreciation objects. A tax depreciation schedule must be prepared to allow the client to amend earlier year’s tax returns to claim missed depreciation advantages. The tax depreciation schedule tends to be pro-rata calculated for the first year of ownership on the basis of the settlement date. It will enable the accountant to derive the precise depreciation deductions for every year.


You must get your rental property depreciation schedule prepared by professional Quantity Surveyors. They will employ a reliable method to calculate your tax depreciation schedule and will also give you an accurate estimation of tax depreciation entitlements that investors may claim on a residential investment property.

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