Buildings and the assets within them wear out. Carpets, appliances, hot water systems, air conditioning units, roofing — all of these have finite useful lives. A depreciation schedule is a formal document, prepared by a qualified quantity surveyor, that sets out the rate at which each component of your property is expected to decline in value over its useful life.
In Australia, there are two separate categories of depreciation that apply to residential investment properties: capital works deductions (relating to the building structure itself) and plant and equipment depreciation (relating to removable assets and fixtures). The rules governing each — including what qualifies, at what rate, and for how long — are set by the Australian Taxation Office and should be applied with guidance from a registered tax agent.
What a depreciation schedule contains
A depreciation schedule typically lists every depreciable item in the property, its effective life (as determined by the ATO or a quantity surveyor's assessment), and the annual depreciation amount applicable to it. For a residential property, this can be a long and detailed list — from structural elements like roofing and flooring through to individual appliances and fittings.
The schedule is usually provided as a multi-year table, showing the projected depreciation claim for each future income year. It is prepared once (typically after purchase) and used year after year until each asset is fully depreciated or the property is sold.
When you need one
Newly built or recently constructed properties
New builds generally have the most depreciable value, since both the structure and all plant and equipment are at the beginning of their useful lives. The earlier a schedule is prepared after purchase, the more accurately it captures the full starting value.
Older properties with recent renovations
If a property has been renovated — new kitchen, new bathrooms, new flooring — the improved components may generate significant depreciation claims. A quantity surveyor can assess what was added and when.
Any investment property, generally
Even older properties with less obvious depreciation often have some claimable value. Whether the cost of obtaining a schedule is worthwhile depends on the specific property and its age — a quantity surveyor can usually provide a cost-benefit assessment before you commission a full report.
Common misunderstandings
- Depreciation does not mean the property is losing value on the market — it is an accounting concept, separate from market value movements.
- A depreciation schedule is not something you prepare yourself. It must be done by a qualified quantity surveyor registered with the Australian Institute of Quantity Surveyors (AIQS) or equivalent body.
- Claiming depreciation has implications for your cost base when you eventually sell the property. This is a matter for your accountant or tax agent, not something to navigate alone.
- The rules changed in 2017 for second-hand plant and equipment. Properties purchased after 9 May 2017 that are not brand new have different plant and equipment rules. A qualified quantity surveyor will account for this.
Where the schedule fits in your records
A depreciation schedule is a document you will need every year for as long as you hold the property. It should be stored alongside your other property documents — accessible, backed up, and attached to the specific property it relates to. Losing your depreciation schedule means either paying to have it reconstructed or losing the ability to substantiate your claims.
How Akweno solves this
Akweno's Document Vault lets you store your depreciation schedule against each property, alongside your lease, insurance policy and other key documents. It will always be where you expect it — attached to the property it belongs to, not buried in a folder somewhere.