Rental Property Depreciation

A depreciation claim come is 2 forms, one for the structure, the other for the fixtures and fittings.

Capital Works

You can claim a tax deduction at 2.5% per annum (over 40 years) for the construction cost of the structure.

Capital Allowances

Fixtures and Fittings can be depreciated over their useful economic life e.g.: Oven over 8 years at 12.5% per annum

In the past you could depreciate fixtures and fittings which were already in the property when you acquired it. That deduction has been stopped. For you to make a valid depreciation claim for fixtures and fittings, you have to have paid for them yourself.

Immediate deductions are available for items less than $300 e.g.: tools or small items of furniture in rental property.

A set of assets costing more than $300 can’t be split into individual units, e.g.: set of 6 dining chairs.

You may have heard talk of large amounts being written off under the “Instant Asset Write Off” or "Temporary Full Expensing” rules. These deductions are available for businesses. Unfortunately, the ATO has determined that property rental operators are “Investors” earning passive income, rather than being “in business”.

We strongly recommend that you obtain a depreciation report from a specialist organisation. The report is a one-off and costs about $600 (tax deductable) but the report details all the depreciation that you can legally claim, for all the property assets, for their full economic life. Well worth it, and they usually pay for them selves in the first year.

Talk to your MKA contact or email us at

We can give you the names of a few specialists that can provide the reports.