Tax Depreciation Calculator: The Benefits of a Tax Depreciation Schedule with Sample Calculations
What is Tax Depreciation?
The Australian Tax Office (ATO) allows for the costs of construction and fit out of investment properties to be claimed back over time against the income earned on the property.
How does a Tax Depreciation Schedule work?
- A physical inspection of your property is carried out to assess all eligible items.
- A Tax Depreciation Schedule is prepared by a qualified Quantity Surveyor, who calculates the available deductions for the property.
- You are provided with a Tax Depreciation Schedule that details the eligible amounts that can be claimed in your tax return over a 20 or 40 year period.
Who can make a claim?
All owners of income-producing property should investigate whether their property qualifies for a Tax Depreciation Schedule.
If the building improvements don’t give rise to a claim, a claim for the fittings or plant items may be possible.
Tax Depreciation Schedules are applicable to all property types, including:
- Commercial
- Residential
- Agribusiness
- Plant and Equipment
- Internal Fit Out
Almost every Commercial property type will qualify, which can benefit both the landlord and tenant. If the building improvements don’t give rise to a claim, a claim for the fittings/plant items may be possible.
Remember: If the building is too old, there may still be an eligible claim for renovation works.
What can be claimed?
Division 40: Plant and Equipment
You may be able to claim for Division 40 Plant and Equipment, which covers things like window furnishings, carpet and floating flooring, remote garage door motors and controllers, kitchen appliances, heaters, air conditioners, ceiling fans, hot water system, smoke alarms, pumps etc.
Division 43: Building and Structural Improvements
You may also be eligible to claim for Division 43 Building and Structural Improvements. Examples include retaining walls, pools, paving and driveways, clotheslines, fencing and pergolas.
Can claims be backdated?
A claim can be backdated up to two years without a variation to a tax return. Claims can be made for periods longer than this with a variation to a previous tax return.
No available deductions? No charge.
Using Opteon as your tax depreciation specialist is risk-free. Submit the details of the relevant property, and if we don’t think sufficient deductions are available for the property to cover our fee, we’ll recommend that you don’t proceed.
Get in touch
Opteon’s Tax Depreciation specialists can work with you to reduce the amount of tax payable on your investment property.
Opteon can prepare a Tax Depreciation Schedule to help you (or your accountant or tax agent) understand how to claim a wide range of potential tax deductions for your investment property.
Call us today on 1300 40 50 60, or contact us by clicking here.
Example Tax Depreciation calculations
Townhouse (First Owner) Annual Tax Allowance Calculator
This townhouse was constructed in 2008.
It features three bedrooms and two bathrooms.
| YEAR | DIV 43: BUILDING | DIV40: FITTINGS/PLANT | ANNUAL TOTAL |
|---|---|---|---|
| 1 | $5,184 | $2,742 | $7,926 |
| 2 | $8,191 | $3,482 | $11,673 |
| 3 | $8,191 | $2,625 | $10,816 |
| 4 | $8,191 | $2,948 | $11,139 |
| 5 | $8,191 | $1,241 | $9,432 |
| 6 | $8,191 | $1,053 | $9,244 |
| 7 | $8,191 | $896 | $9,087 |
| 8 | $8,191 | $763 | $8,954 |
| 9 | $8,191 | $652 | $8,843 |
| 10 | $8,191 | $558 | $8,749 |
| 11+ | $248,738 | $3,736 | $252,474 |
| Total | $327,641 | $20,697 | $348,338 |
Townhouse (Second Owner) Annual Tax Allowance Calculator
This example features the same townhouse from the perspective of a second owner.
The contract was settled post-May 2017.
| YEAR | DIV 43: BUILDING | DIV40: FITTINGS/PLANT | ANNUAL TOTAL |
|---|---|---|---|
| 1 | $5,184 | $0 | $5,184 |
| 2 | $8,191 | $0 | $8,191 |
| 3 | $8,191 | $0 | $8,191 |
| 4 | $8,191 | $0 | $8,191 |
| 5 | $8,191 | $0 | $8,191 |
| 6 | $8,191 | $0 | $8,191 |
| 7 | $8,191 | $0 | $8,191 |
| 8 | $8,191 | $0 | $8,191 |
| 9 | $8,191 | $0 | $8,191 |
| 10 | $8,191 | $0 | $8,191 |
| 11+ | $248,738 | $0 | $248,738 |
| Total | $327,641 | $0 | $327,641 |
Apartment Annual Tax Allowance Calculator
This apartment, constructed in 2008, was purchased for $482,000.
Sized at 69sqm plus common area, the apartment features two bedrooms, a basement garage, and a lift.
| YEAR | DIV 43: BUILDING | DIV40: FITTINGS/PLANT | ANNUAL TOTAL |
|---|---|---|---|
| 1 | $743 | $3,610 | $4,354 |
| 2 | $4,173 | $5,721 | $9,895 |
| 3 | $4,173 | $4,066 | $8,239 |
| 4 | $4,173 | $4,615 | $8,788 |
| 5 | $$4,173 | $1,547 | $5,270 |
| 6 | $$4,173 | $1,242 | $5,416 |
| 7 | $$4,173 | $1,006 | $5,179 |
| 8 | $$4,173 | $820 | $4,993 |
| 9 | $$4,173 | $673 | $4,846 |
| 10 | $$4,173 | $556 | $4,729 |
| 11+ | $124,342 | $3,553 | $127,894 |
| Total | $162,645 | $27,408 | $190,053 |
Dairy Farm (Free Hold) Annual Tax Allowance Calculator
This circa-1970s farm was purchased for $1.62M in July 2014.
The farm is approximately 112 hectares.
| YEAR | DIV 43: BUILDING | DIV40: FITTINGS/PLANT | ANNUAL TOTAL |
|---|---|---|---|
| 1 | $1,442 | $131,972 | $133,413 |
| 2 | $1,499 | $124,855 | $126,354 |
| 3 | $1,499 | $106,206 | $107,705 |
| 4 | $1,499 | $91,101 | $92,600 |
| 5 | $1,499 | $78,660 | $80,159 |
| 6 | $1,499 | $68,269 | $69,768 |
| 7 | $1,499 | $59,495 | $60,994 |
| 8 | $1,499 | $52,021 | $53,520 |
| 9 | $1,498 | $45,610 | $47,088 |
| 10 | $1,444 | $40,082 | $41,526 |
| 11+ | $12,549 | $328,774 | $341,325 |
| Total | $27,406 | $1,127,045 | $1,154,452 |
Warehouse Annual Tax Allowance Calculator
In this example, an 861sqm warehouse was purchased for a sale price of $840,000
| YEAR | DIV 43: BUILDING | DIV40: FITTINGS/PLANT | ANNUAL TOTAL |
|---|---|---|---|
| 1 | $3,026 | $2,387 | $5,413 |
| 2 | $13,470 | $5,057 | $18,508 |
| 3 | $13,470 | $3,883 | $17,303 |
| 4 | $13,470 | $5,171 | $18,641 |
| 5 | $13,470 | $1,825 | $15,296 |
| 6 | $13,470 | $1,825 | $15,296 |
| 7 | $13,470 | $1,825 | $15,296 |
| 8 | $13,470 | $1,825 | $15,296 |
| 9 | $13,470 | $1,825 | $15,296 |
| 10 | $13,470 | $1,239 | $14,709 |
| 11+ | $331,485 | $6,374 | $337,859 |
| Total | $455,745 | $33,167 | $488,912 |
DISCLAIMER
This material is produced by Opteon Property Group Pty Ltd. It is intended to provide general information in summary form on valuation and property advisory related topics, current at the time of first publication. The contents do not constitute advice and should not be relied upon as such. Formal advice should be sought in particular matters. Opteon’s quantity surveyors and valuers are qualified and experienced in providing depreciation schedules of your property. Opteon does not provide accounting, specialist taxation or financial advice. Liability limited by a scheme approved under Professional Standards Legislation.
