Investment property always comes with lucrative tax benefits and that makes it highly attractive for many investors in Australia. Property has some eye-catching depreciation tax benefits that investors avail every year to minimise their tax bills. It helps in maximising the return on investment that you get. When you decide to use a specific property for the investment purpose, you may want it to rise in value. As the value of the property surges, the assets available in it will undergo wear and tear. Given below are some key points that may prove helpful for you:

You may claim depreciation deductions under two top categories known as plant and equipment depreciation and capital works deduction.

i) Capital works deduction:

It is related to the structure of buildings and objects believed to be everlastingly fixed to it. It may include cupboards, doors, kitchen, and the sinks in the kitchen area. It is interesting to note that residential houses where construction started after September 15, 1987, will qualify to claim capital works deductions. The deduction can be claimed at 2.5 percent interest rates for 40 years. Property depreciation consultants are the expert individuals who can effectively calculate your capital works deduction.

ii) Plant & equipment assets:

These are the objects that can be conveniently removed from the property. It may include the hot water system, blinds, carpet, etc. These assets do not have a very long life span as specified by the ATO. They are eligible to be depreciated over a period of time.

Here are some vital benefits that you can’t overlook when you build a new investment property:

1. Legislation changes

An investor who decides to build a new property will not be impacted by legislation changes passed in 2017. These changes eradicated the capacity to claim a deduction for earlier used plant and equipment assets discovered in second-hand residential investment properties. Owners of newly constructed property are still eligible to seek depreciation deductions for all qualified plant and equipment assets in their property. In order to claim your deduction in the right manner and enjoy all the benefits, it is important to read depreciation rules for rental property.

2. Property investors can claim a deduction for a higher tenure

The owners of newly constructed properties will remain entitled to claim a deduction for the complete cost of building structure. And, they will be able to claim this deduction for a period of 40 years. Meanwhile, the owners of the existing property lack this advantage. They will only be able to claim the deductions only for the remaining years available to them.


If you plan to buy an existing property, give your decision a re-think. The depreciation tax deduction on rental property has been availed by the scores of investors. But, you can enhance your depreciation deduction now and enjoy more benefits. It will become feasible only when you decide to build a new property. Investing in an existing property will reduce your number of years for seeking claim of the depreciation deduction. And, you will also be impacted by legislation changes introduced in the year 2017 as well.