Frequently Asked Depreciation Questions

Most people focus on cash flow when buying investment properties. They overlook greater benefits like depreciation on investment propertyand tax benefits. One of the biggest benefits of depreciation is that it can reduce reportable net income and therefore your taxes. To help you better understand depreciation, here are some of the most frequently asked questions. Let’s jump right in.

1. What is Depreciation?

As something gets older – for example a building – its structure and the assets contained within wear out. It loses value overtime due to age and deterioration. This loss of value is called depreciation. The owners are allowed to claim it as a tax deduction.

2. Will Claiming Depreciation Help an Investor?

As you use your tax calculator to calculate the tax you owe, claiming depreciation deductions can make a big difference in your cash flow. Deductions cover the lifetime of a property to ensure you maximize your cash flow. They are 100 percent deductible.

3. Who is Qualified to Assess The Depreciation

The purchaser of a building cannot establish the actual cost of a building. The only building cost estimate accepted is from an appropriately qualified person. This qualified person has expertise in the calculation of building construction costs. He or she is also likely to be accepted by a court as an expert witness.

4. What is a Depreciation Schedule?

This is a comprehensive report outlining the depreciation deductions to be claimed by investment property owners. It is based on the property’s building structure, and fixturesand fittings within it. A depreciation schedule prepared by a specialist like DEPPRO Pty ltd will maximize the cash return from your investment property each year, even in Sydney.

5. Why should a Depreciation Schedule Last Forty Years?

The ATO determines any building eligible to claim a write-off allowance. It should have a maximum effective life of forty years from the date the construction was completed. The owner of a brand new building can claim depreciation up to forty years. Consequently, the balance of forty years period is claimable on an older property.

6. How is Building Age Calculated?

Official council documents with dates pertaining to the original application approval date determines the age of a building. The occupancy certificate and final inspection date can also be used. A DEPPRO Pty ltd quantity surveyor conducts the relevant searches and accurately determines the age of your building.

Ask yourself the above questions about depreciation to help you figure out if you are eligible for more tax-saving benefits. It isa great opportunity to put some of your tax money back into your investments.


If you are going to invest money on a rental property, use every tactic in the book to get the most profit from it. Hirea firm like DEPPRO Pty ltd that specializes in this area. It wouldbe awise investment of time and money. We are dedicated to providing you with the knowledge, tools, and support you need – even withproperty report. Contact us to find what we can do for you.