Claiming depreciation on an overseas investment property

By Tyron Hyde | 15 Oct 2015
Having woken up well before the crack-of-dawn one morning last month to watch the Rugby world Cup in England, I found myself wondering, how many teams there are competing in the tournament this year.

Having identified that 20 teams from all over the world qualified to play in the World Cup, my mind then drifted onto counting how many countries Washington Brown have prepared depreciation reports for over the last few years.

It turns out, we have carried out property depreciation reports on investment properties in a whopping 30 different countries to date, and that number will most definitely be higher by the time this article is published.

The scope of work Washington Brown are currently experiencing abroad is really interesting from a Quantity Surveying/Construction Costing perspective and is becoming increasingly varied. Recent properties have ranged from apartments and houses in the UK and USA, multimillion dollar villas in Monaco through to ski chalets in Bulgaria and New Zealand and even a couple of apartment blocks in Iran.

Our clients also vary from people who have recently migrated to Australia renting out their former homes, Self-Managed Super Fund Trustees looking to spread their portfolios’ risk, ex pats coming to work in Australia or returning home from an overseas posting as well as ‘mum and dad’ investors expanding their investment portfolio.

To me this it really reinforces the global economy we now live in, and what a wonderfully diverse melting pot of nationalities Australia has become.

If you have bought an overseas investment property, or you have migrated to Australia and are now having to declare your rental income on a property you still own in your home country to the ATO, you might be entitled to claim depreciation on any overseas property you still hold and reduce your taxable income.

When claiming depreciation on an overseas investment property you need to be aware that there are some differences to Australian investment properties in regards to ATO rulings.

Three of these differences are:
1) The building allowances component is only applicable for residential properties built after 1990, not 1987 as it is for Australian properties. (NB.all investment properties qualify for claiming on the plant and equipment component.)

2) Construction costs vary from country to country. Our reports are estimated at the local rates, not Australian rates. We then convert this value into Australian currency at the prescribed ATO rate.

3) Just like in Australia, overseas investment properties start depreciating from the date you take ownership. However you can only claim tax deduction from the time you became an Australian tax payer, so it’s important to provide this information before proceeding to ensure it is worthwhile for you to have a report completed.

If you’re unsure if your property qualifies for depreciation allowances, or whether you have owned it too long to be eligible to claim depreciation deductions, give one our tax depreciation specialists a call on 1300 990 612 or email We can talk through your investment scenario to see if there is a benefit in having a report prepared.

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.


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