Depreciation on Older Properties
Do Older Investment Properties Still Qualify for Depreciation?
Many property investors assume that Depreciation only applies to new buildings. In reality, older investment properties can still qualify for Depreciation deductions in many situations.
Understanding how Depreciation applies to older properties can help investors avoid missing valuable Tax Deductions.
Can You Claim Depreciation on Older Properties?
Yes. Even if a property is several decades old, there may still be Depreciation deductions available.
While some assets may have already reached the end of their effective life, other components of the property may still qualify for deductions.
These can include structural elements of the building as well as certain improvements or renovations.
Capital Works Deductions (Division 43)
Capital works deductions relate to the structural elements of a building.
In Australia, these deductions are generally available for 40 years from the date construction was completed.
This means that even if a property is 20 or 30 years old, there may still be remaining deductions available for the building structure.
Examples of capital works include:
Concrete slabs and foundations
Brickwork and walls
Roof structures
Doors and windows
Fixed cabinetry
Renovations Can Create New Depreciation
One of the most common sources of depreciation in older properties is previous renovations.
If a bathroom, kitchen, flooring, or other improvements were installed after the original construction, these items may still qualify for depreciation.
Even if the current owner did not carry out the renovation, deductions may still be available.
Plant and Equipment in Older Properties
Changes to tax legislation in recent years mean that second-hand plant and equipment assets are not always claimable by residential investors.
However, deductions may still be available in certain situations, particularly where assets were installed as part of new construction or new renovations.
Why Many Investors Assume Older Properties Don’t Qualify
Many investors believe their property is “too old” to claim depreciation.
This misconception often occurs because the building itself may appear dated, even though it may still contain depreciable components.
A professional assessment is often required to determine what deductions remain available.
How a Depreciation Schedule Helps
A Depreciation Schedule prepared by a Quantity Surveyor identifies the remaining depreciable elements of a property and estimates construction costs where original records are unavailable.
The schedule provides a year-by-year breakdown of deductions that investors can provide to their accountant at tax time.
Request a Free Depreciation Estimate
If you own an older investment property and are unsure whether Depreciation deductions may still be available, a free Depreciation Estimate can help clarify the potential benefit before committing to a full schedule.
At R24, we offer investors a free estimate so they can understand the likely deductions available before ordering a report. This allows property owners to make an informed decision based on the expected outcome.
Rather than relying on generic marketing offers, an estimate provides a practical indication of whether preparing a depreciation schedule is worthwhile for your property.
To request an estimate, simply provide the property address and a few basic details. Our team can review the property and provide an indication of the deductions that may be available.
Common Questions About Depreciation on Older Properties
Can you claim Depreciation on a property that is more than 40 years old?
Possibly. While capital works deductions are generally available for 40 years from the date of construction, many older properties have undergone renovations or improvements that may still qualify for depreciation.
Can you claim Depreciation on renovations completed by a previous owner?
Yes. In many cases, structural improvements such as kitchens, bathrooms, flooring, and extensions installed by previous owners may still qualify for capital works deductions.
Is Depreciation still worthwhile for older investment properties?
In many situations it can be. Even if the original building is older, renovations, extensions, and remaining structural components may still generate meaningful deductions.
Do you need a Quantity Surveyor to prepare a Depreciation Schedule?
The Australian Taxation Office recognises Quantity Surveyors as one of the professionals qualified to estimate construction costs for depreciation purposes where original cost records are not available.
How can investors find out if Depreciation is available on their property?
One of the easiest ways is to request a depreciation estimate. This provides an indication of the potential deductions before ordering a full depreciation schedule.
This article was prepared by the team at R24 Quantity Surveyors, specialists in Tax Depreciation Schedules for residential and commercial property across Australia.