What is a tax depreciation schedule?
A tax depreciation schedule records assessed building costs and depreciating assets for an income-producing property. It provides year-by-year information for your accountant to assess the deductions you can claim. It is not a market valuation or a guarantee of a tax refund.
Two parts to understand
Capital works concern eligible construction expenditure. Plant and equipment concern separately assessed depreciating assets. The categories have different rules, so the purchase price should not simply be treated as one depreciable amount.
Restrictions can apply to second-hand assets in residential rental properties. Tell the provider when you acquired the property, whether assets were previously used and when any new items were bought. Your accountant should check the rules and exceptions for your circumstances.
What should the report contain?
- The property, ownership and assessment details.
- The construction and asset information used, with assumptions identified.
- The categories and calculation methods applied.
- Annual figures and any first-year apportionment.
- The treatment of common property or shared ownership where relevant.
- Limitations and records your accountant still needs.
Prepare an evidence folder
Collect purchase and settlement details, rental and private-use dates, construction invoices, renovation records, new-asset receipts and any previous schedule. Label unknown information clearly.
Where actual construction costs cannot be established, an appropriately qualified person may need to estimate them. Ask the provider which records are sufficient and whether a site inspection is needed before committing to the scope.
Example: avoid mixing old and new assets
Hypothetical preparation example. An investor buys an established unit and later installs a new dishwasher. Keep the purchase information and the dishwasher invoice separately, with installation and first-use dates. The provider can then identify the items correctly; the accountant decides whether deductions are available. This example predicts no deduction amount.
Is a schedule worth the cost?
Discuss the property's age, renovation history, existing records and likely scope with the provider and accountant. Request a written quote stating the fee, GST, inspection, years covered and any update charges. Compare that fee with an informed assessment of usefulness rather than assuming the schedule pays for itself.
When should a schedule be updated?
Ask for a review after renovations, replacement assets, ownership changes or changes in use. Send the previous report and a dated list of changes. Confirm whether an update or a new assignment is appropriate.
Frequently asked questions
Does buying the property restart its capital works period?
No. A later owner uses any remaining eligible period; ownership changes do not restart the construction deduction clock.
Can I use my own construction records?
Provide complete invoices and cost records to your accountant and the report provider. An estimate is not automatically needed where actual costs can be established.
Will the report calculate my tax refund?
No. Your accountant determines your eligibility and tax treatment, including any CGT cost-base implications. A deduction figure and a cash refund are different amounts.
Can it help with an earlier tax return?
Ask your accountant to check amendment time limits and the evidence required for the particular income year before commissioning historical work.
Sources and further reading
- ATO: Work out your capital works deductions — Eligible construction expenditure and applicable deduction rules.
- ATO: Second-hand depreciating assets — Restrictions relevant to previously used residential rental assets.
Arrange the right report
Explore tax depreciation with Propti. Send the property address, purpose, required date and recipient’s instructions when you request a property report quote.