If you own an investment property then the Australian Taxation Office (ATO) will usually allow you to claim a tax deduction for depreciation.


Depreciation is an accounting term and describes the decline in value of an asset due to a limited effective life. For example you can depreciate flooring, window treatments and the building structure itself.


As an investment depreciates (deteriorates or loses value) due to wear and tear or age, the tax act allows the taxpayer to write off this amount against the income produced by the property or any other form of income.


Final depreciation schedules offer attractive tax incentives for property investors and the cost is fully tax deductible. It also may be used as a marketing tool when selling your property.


There are two types of depreciation reports, the Indicative Tax Depreciation Schedule and the Final Tax Depreciation Schedule.


An Indicative Tax Depreciation Schedule is only preliminary and should be used as a guide when selling or purchasing property and cannot be used for claiming depreciation. In comparison, the Final Tax Depreciation Schedule is more detailed, covers property specifics and can be submitted for the purpose of depreciation claims.