Understanding Depreciation: The "Invisible" Deduction

As a building and its fixtures (like carpets, ovens, and blinds) get older, they wear out and lose value. The ATO allows property investors to claim this "loss in value" as a tax deduction, even though no money is actually leaving your pocket.

Key Concepts

• Division 43 (Capital Works): Deductions for the structure of the building (concrete, brickwork). Usually claimed at 2.5% per year for 40 years.
• Division 40 (Plant & Equipment): Deductions for removable items like dishwashers, carpets, and hot water systems. These have shorter "effective lives."

How it works in PropKeeper

When you receive a professional Depreciation Schedule, you can enter the annual figures into PropKeeper. This ensures your "Net Yield" and "Tax Estimates" are accurate, showing you the true performance of your investment.

Do I need a schedule?

If your property was built after 1987, or has been significantly renovated recently, you almost certainly need a professional Quantity Surveyor to create a schedule for you. It often pays for itself in the first year through tax savings.

Pro Tip

If you're a tradie doing your own renovations, keep a list of the brand and model of the appliances you install. Your Quantity Surveyor will use this to maximize your "Plant & Equipment" deductions.