Can you claim depreciation on renos?

By Aidan Devine | 01 May 2012


Question: I know that depreciation doesn’t apply to properties built before 1985, but what about renovations that have been done since then? If I install a new kitchen for example, can I start claiming depreciation on that because it was installed after 1985? What about new curtains, carpets etc.? Any help would be much appreciated. 

Answer: I assume that you are referring to the depreciation of the building (otherwise known as a capital works deduction). If this is the case, you are correct – generally buildings built before 18th July 1985 are not entitled to this deduction. 

However, provided a property is used for rental or otherwise income producing purposes, a capital works deduction can be claimed for the construction costs of the building if the construction started on or after 18 July 1985. Additionally, a capital works deduction can be claimed for the cost of structural improvements on or after 27 February 1992. Structural improvements would include the installation of a new kitchen. 

On the other hand, decline in value (depreciation) can be claimed for all other assets used in the rental property. They would include items like curtains, carpets, furniture and electrical appliances. Such items generally would not form part of the building itself, retaining its own distinct separate identity to the building. 

The annual rate of depreciation is based on the effective life of the asset and differs from one asset type to another. Every year the Australian Taxation Office publishes a guide to depreciating assets that contains suggested effective lives for rental property assets. A quantity surveyor would be able to assist in determining the depreciation value of the assets and their depreciation rate. 

  • Answer provided by Dom Cosentino, Kennedy & Co Chartered Accountants

Top Suburbs : collingwood , kariong , revesby hts , murdoch , cardiff south


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here