Tax Depreciation Assessments - FAQ

What are the steps to arrange a depreciation schedule from TDA?

In order to complete a Depreciation Schedule for your investment property TDA will assess your property by means of a detailed property inspection to try to determine age and other relevant factors.

We are happy to arrange this inspection through the managing agent for the property or directly with your tenants.

The following information is requested from you:

1. Purchase (settlement) date, and the date the property became ‘available for rent’.
2. Cost and purchase date of any item you have purchased since owning the property.
3. Construction Cost information (where applicable).
4. Your authority to inspect the building file for the property, if available.
 

What are the benefits of a depreciation schedule?

The TDA Depreciation Schedule addresses both the construction cost and plant and equipment elements of depreciation thus providing a clear and complete picture of the depreciation available to you on your investment property.

We prepare and present the schedule in an easy to read format, making it easy for your Accountant or Tax Adviser to use when preparing your tax return.
 

Who benefits from a complete depreciation schedule?

Property investors use the depreciation schedule in calculating and forecasting potential cash flow gains available through maximising the taxation allowance available on their investment property.

Buyers of investment properties refer to the depreciation information in calculating returns (or yields) on their purchase.
 

Can depreciation be claimed on any investment property?

Certain cut off dates apply for depreciation claims relating to residential investment property.

As a general rule any building, irrespective of age, may attract a claim for depreciation of the plant and equipment items.

In order to depreciate the original construction or any subsequent additions/renovations, the property must meet the construction date guidelines as shown following.
 

Division 43 Capital Works Deductions

It is a requirement of Division 43 of the Income Tax Assessment Act that the qualifying expenditure shall be based on the historical cost of construction of the asset. TR97/25.

A capital allowance deduction for the cost of construction of an income-producing asset may be available under Division 43 of the ITAA.  Eligibility for this deduction relies on the date the footings were laid for that structure and varies for the original structure and later improvements as follows:

The prime cost rates for Capital Works Deductions are 2.5% or 4% and are triggered by the date of commencement of the building works, and the type of building.  To these costing/schedules the following rates can be used:-

Residential Construction

Non-Residential Construction

Short Term Accommodation

Manufacturing

Is the cost of the depreciation schedule tax deductible?

Yes.  The cost of obtaining an estimate of construction costs of a rental property by an appropriately qualified person is deductible in the year it is incurred.