A depreciation schedule report is a document prepared by a qualified quantity surveyor that lists all the depreciable assets within an investment property, along with the tax deductions the owner can claim each financial year. In Brisbane, most investment properties qualify for depreciation claims covering both the building structure (capital works) and removable items like appliances, carpets, and blinds (plant and equipment). These deductions can total thousands of dollars per year, reducing taxable income and improving cash flow for property investors.
Property investment in Brisbane continues to attract both local and interstate buyers. One of the most overlooked financial benefits of owning an investment property is depreciation. Many investors either do not claim depreciation at all or significantly underestimate the deductions available to them. This guide explains how depreciation schedules work, what they include, how to get one, and the common mistakes that cost investors money.
What Is a Depreciation Schedule?
A depreciation schedule is a detailed report that lists every component of an investment property that loses value over time, along with the annual tax deduction the owner can claim for each item. It covers everything from the building structure itself to individual items like air conditioning units, kitchen appliances, and floor coverings.
The schedule is prepared by a qualified quantity surveyor who inspects the property and calculates deductions based on the age, condition, and effective life of each asset. The resulting document is used by the property owner's accountant or tax agent when preparing their annual tax return.
Types of Depreciation Claims
| What It Covers | Depreciation Rate | Claim Period | |
|---|---|---|---|
| Capital Works Deductions (Division 43) | The building's structure, including walls, roof, floors, doors, windows, and fixed improvements | 2.5% per year for buildings constructed after 15/09/1987 | Up to 40 years from construction completion |
| Plant and Equipment (Division 40) | Removable or mechanical items including appliances, carpets, blinds, hot water systems, and air conditioning | Varies by item, based on effective life set by the ATO | Varies by item, typically 5 to 20 years |
Since 2017, second-hand plant and equipment in residential investment properties purchased after 09/05/2017 can generally only be depreciated by the first owner. Capital works deductions remain claimable by subsequent owners. These rules were introduced under the Treasury Laws Amendment (Housing Tax Integrity) Act 2017.
Benefits of a Depreciation Schedule
Maximising Tax Deductions
A depreciation schedule identifies every depreciable item in your property, making sure you claim the full amount you are entitled to. Without a schedule, investors often miss deductions worth thousands of dollars each year. The ATO allows these deductions because property assets genuinely lose value over time through normal wear and ageing.
Improving Cash Flow
The tax savings from depreciation deductions go directly to improving your annual cash flow. For many Brisbane investors, depreciation can turn a negatively geared property into a cash-flow-neutral or even positively geared investment when combined with other deductions.
Long-Term Financial Planning
A depreciation schedule maps out your deductions for up to 40 years, giving you a clear picture of the financial benefits over the life of your investment. This helps with budgeting, forecasting returns, and making informed decisions about when to renovate or sell.
Eligibility for a Depreciation Schedule in Brisbane
Most investment properties in Brisbane qualify for a depreciation schedule, provided they meet these conditions:
- The property is used to produce income (rented out or available for rent)
- There are depreciable assets within the property (building structure, fixtures, or fittings)
- The property was built after 15/09/1987 for capital works claims (older properties can still claim plant and equipment)
- The schedule is prepared by a qualified quantity surveyor who inspects the property
A depreciation schedule cannot be prepared for a property that is used solely as your primary residence. The property must generate rental income or be genuinely available for rent to qualify for depreciation deductions.
How to Obtain a Depreciation Schedule
Engage a qualified quantity surveyor
Choose a quantity surveyor registered with the Australian Institute of Quantity Surveyors (AIQS) or the Tax Practitioners Board. They should have experience with Brisbane investment properties.
Property inspection
The surveyor will inspect the property, measuring and documenting the building structure and all depreciable items. For newer properties, they may also review construction drawings and builder invoices.
Report preparation
The surveyor calculates the depreciation for each asset based on the ATO's effective life tables and prepares a detailed schedule covering up to 40 years of deductions.
Submit to your accountant
Provide the completed depreciation schedule to your accountant or tax agent, who will use it to claim the deductions on your annual tax return.
The cost of a depreciation schedule in Brisbane typically ranges from $600 to $800, and the fee itself is tax-deductible.
Common Mistakes to Avoid
- Ignoring eligible deductions: Failing to claim all depreciable items can mean missing out on thousands of dollars in deductions over the life of your property.
- Postponing the schedule: The sooner you obtain a depreciation schedule, the sooner you benefit from tax deductions. Delaying means lost savings that cannot be recovered.
- Not updating after renovations: If you have added a new bathroom, updated the kitchen, or made other improvements, your schedule needs updating to capture the additional depreciable assets.
- Using a non-qualified provider: Only quantity surveyors registered with the AIQS or Tax Practitioners Board can prepare schedules that the ATO accepts. Using an unqualified provider puts your claims at risk.
- Confusing depreciation with capital gains: Depreciation deductions are separate from capital gains calculations. Claiming depreciation does not reduce your cost base for CGT purposes in the same way many investors assume, so always check with your accountant.
Tips for Maximising Your Deductions
- Keep detailed records: Document every improvement, renovation, or asset replacement with receipts, dates, and costs. Good records make it easier for your surveyor to calculate accurate deductions.
- Update the schedule after changes: Renovations and asset replacements create new depreciable items. Have your schedule updated whenever significant changes are made to the property.
- Get the schedule done at purchase: The best time to commission a depreciation schedule is when you first purchase the investment property, so you can start claiming deductions from year one.
- Review with your accountant annually: Work with a property-savvy accountant to make sure you are applying the deductions correctly and staying compliant with current ATO rules.
Key Takeaways
- A depreciation schedule identifies all depreciable assets in your Brisbane investment property and the tax deductions you can claim each year.
- Deductions fall into two categories: capital works (the building structure) and plant and equipment (removable and mechanical items).
- Most Brisbane investment properties qualify for depreciation claims, with deductions potentially worth thousands of dollars annually.
- Only a qualified quantity surveyor registered with the AIQS or Tax Practitioners Board can prepare an ATO-compliant schedule.
- Second-hand plant and equipment rules changed in 2017, limiting some claims for properties purchased after 09/05/2017.
- Common mistakes include not claiming all eligible items, delaying the schedule, and failing to update it after renovations.
- The cost of a depreciation schedule ($600 to $800) is itself tax-deductible and typically pays for itself many times over.
Frequently Asked Questions
QWhat is a depreciation schedule for an investment property?
A depreciation schedule is a detailed report prepared by a qualified quantity surveyor that lists every depreciable asset in an investment property along with the annual tax deduction the owner can claim. It covers the building structure (capital works) and removable items like appliances and carpets (plant and equipment), and can span up to 40 years of deductions.
QHow much does a depreciation schedule cost in Brisbane?
A depreciation schedule in Brisbane typically costs between $600 and $800, depending on the property type, size, and complexity. The fee is tax-deductible for investment property owners, and the schedule usually pays for itself through the tax savings it generates in the first year.
QDo older properties in Brisbane qualify for depreciation?
Yes, but the type of deductions available depends on the age of the property. Capital works deductions are available for buildings constructed after 15/09/1987. Older properties can still claim plant and equipment depreciation on items like carpets, blinds, and appliances, provided the property is used to generate income.
QWho can prepare a depreciation schedule in Australia?
A depreciation schedule must be prepared by a qualified quantity surveyor. The ATO requires that the surveyor be registered with the Tax Practitioners Board or be a member of a recognised professional body such as the Australian Institute of Quantity Surveyors (AIQS). Using an unqualified preparer puts your claims at risk of ATO rejection.
QCan I claim depreciation on a second-hand investment property?
You can claim capital works deductions on second-hand properties built after 15/09/1987. However, since the 2017 changes, second-hand plant and equipment in residential properties purchased after 09/05/2017 can generally only be depreciated by the first owner. Check with your accountant for how these rules apply to your specific situation.
QHow much can I save with a depreciation schedule on a Brisbane property?
The savings depend on the property's age, construction type, and the items inside. A relatively new Brisbane apartment might yield $8,000 to $15,000 in deductions in the first year, while an older house might generate $3,000 to $6,000 per year. Over the life of the schedule, cumulative savings can run into tens of thousands of dollars.
QDo I need to update my depreciation schedule after renovating?
Yes. Renovations create new depreciable assets, including new fixtures, fittings, and structural improvements. If your depreciation schedule is not updated to reflect these changes, you will miss out on additional deductions. Contact your quantity surveyor after completing any significant renovation work.
QIs the cost of a depreciation schedule tax-deductible?
Yes. The ATO allows property investors to claim the cost of obtaining a depreciation schedule as a tax deduction in the financial year the fee is paid. This makes the schedule even more cost-effective, as the fee is offset against your taxable income.
QWhat is the difference between capital works and plant and equipment depreciation?
Capital works depreciation (Division 43) covers the building structure itself, including walls, roofs, floors, and fixed improvements. It is claimed at a flat rate of 2.5% per year over 40 years. Plant and equipment depreciation (Division 40) covers removable or mechanical items like appliances, carpets, and air conditioning units, with varying rates based on each item's effective life as set by the ATO.
QWhen is the best time to get a depreciation schedule for my Brisbane investment property?
The best time to get a depreciation schedule is as soon as you purchase the investment property. This way, you start claiming deductions from the first financial year of ownership. Delaying means you lose deductions for the period without a schedule, as some items depreciate quickly and their value drops substantially in the early years.
References and Resources
- Australian Taxation Office (ATO) - Rental Property Depreciation - Rules for claiming depreciation on investment properties
- Australian Institute of Quantity Surveyors (AIQS) - Professional body for quantity surveyors in Australia
- Treasury Laws Amendment (Housing Tax Integrity) Act 2017 - Changes to plant and equipment depreciation rules
- QBCC - Queensland Building and Construction Commission - Building standards and regulations in Queensland
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Looking to maximise tax deductions on your Brisbane investment property? Owner Inspections partners with experienced quantity surveyors to deliver accurate depreciation schedule reports across Brisbane and Queensland. Get a quote today or call us on 1300 471 805.