Many residential property investors miss out on valuable tax depreciation deductions each financial year. The reason is simple: they either do not know about tax depreciation schedules or have never used one prepared by a qualified quantity surveyor. For accountants and registered tax agents, this represents both a risk and an opportunity.
A tax depreciation schedule is an Australian Taxation Office (ATO) compliant depreciation report that sets out how much an investor can claim each financial year for the natural wear and tear and decline in value of their income producing property and its equipment assets. By applying it, you can help clients lower taxable income, free up cash flow and improve investment returns through maximised tax benefits.
A tax depreciation schedule is a detailed report prepared by a qualified quantity surveyor. It shows the depreciation allowances and tax depreciation deductions a property investor can claim for the decline in value of a building and its plant and equipment assets.
It covers two types of deductions:
- Division 43 (Capital Works Deductions): structural items such as walls, roofs, foundations, and tiling.
Division 40 (Plant and Equipment Depreciation): removable assets such as carpets, appliances, blinds, ceiling fans, and air conditioning.
One tax depreciation schedule can last up to 40 years, giving long-term value. Without it, clients often miss thousands of dollars in fully tax deductible legal deductions.
Depreciation is a non cash deduction. Clients reduce taxable income without spending money.
For example, an investor with a $500,000 residential investment property and $20,000 in plant and equipment may claim more than $10,000 in depreciation claim deductions in year one. At a 37% tax rate, this could mean about $3,700 in tax savings.
Over time, these tax depreciation deductions add up to tens of thousands of dollars. For multiple-property clients, depreciation can turn a negatively geared portfolio into one that is cash flow positive.
Investment property depreciation schedules are useful across a range of scenarios:
- New builds: Maximum tax benefits available across both Divisions.
Renovated properties: Improvements, even from previous owners, may be claimable.
Older properties: Even if too old for Division 43 capital works deductions, fixtures may still qualify under Division 40 plant and equipment depreciation.
Clients who never claimed before: Missed depreciation allowances can often be retrospectively claimed by amending past financial year tax returns.
Accountants who consider tax depreciation in these cases help clients unlock cash flow that would otherwise be lost.
Only a qualified quantity surveyor can prepare tax depreciation schedules, but accountants and registered tax agents are key in making sure clients benefit.
Your role includes:
Reviewing client portfolios to identify eligible income producing properties.
Referring clients to a TPB registered quantity surveyor to prepare tax depreciation reports.
Applying schedule data when completing tax returns.
Educating clients on how tax depreciation supports long-term planning and maximises tax deductions.
This positions you not just as a compliance partner but as a trusted advisor.
To integrate Duo Tax depreciation into your service:
1. Contact Duo Tax to assess property eligibility – check build dates, renovations, asset values, and asset types.
2. Incorporate into financial year tax returns – apply the method (prime cost or diminishing value) best suited to the client.
3. Review each year – update schedules for new assets, renovations, or instant asset write off claims.
4. Educate clients – highlight tax depreciation as a simple way to claim all the deductions and improve cash flow.
Tax depreciation schedules are more than compliance documents. They are tools that free up cash, lower taxable income, and support stronger investment returns.
For accountants and registered tax agents, the value lies in proactively guiding clients through the process. By reviewing portfolios, referring to specialists, and applying schedules in tax planning, you help clients capture depreciation claim deductions that might otherwise go unclaimed.
In today’s competitive environment, ensuring clients access every tax deduction sets you apart. A tax depreciation schedule is one of the most effective ways to save thousands.
Contact the team at Duo Tax to discuss how we can help maximise cash flow with tax depreciation schedules.
Get breaking news
iscover
