Claiming Depreciation on a Newly Built Investment Home

When referring to a newer investment home, I am referring to a property where construction first commenced either on or after the 15/09/87. House and land packages purchased from a builder, as well as apartments and townhouses purchased off the plan through the developer also fall into this category.

This is where it is quite lucrative to claim depreciation on an investment home. Irrespective of the name of ownership, if you are renting out a home, you will be able to claim depreciation on it. If you own your own home, and you rent out a portion of your home to someone else and/or to your business, then depreciation is claimable at set percentage rates. For the latter, please check with your accountant.



All investment homes built on or after the 15/09/87 receive depreciation at 2.5% per year from the year construction commenced of the total construction cost over a 40-year period.

If you purchased an investment home either as a house and land package from the builder, or you already owned the block of land and arranged for a builder to build the house on this land; then chances are you will know what total construction cost means. This is completely different to the purchase price of a property. Water views and the location do not add to the depreciation of a property.



In order to claim depreciation on the building, you will need to engage in the services of a Quantity Surveyor with appropriate qualifications. Having used Depreciator for my investment houses, I've found their service in preparing an ATO compliant 20 year Tax Depreciation Schedule with or without the total construction cost to be a real godsend.



If you cannot provide the total construction cost of your investment home, together with the builders assets list/inclusions/specifications, together with a copy of the floor plans; one of their Quantity Surveyors goes out and physically inspects your investment home to work out the construction cost and asset values.



Investment homes built around 10-20 years ago can attract anywhere from $4,000 - $6,500 worth of depreciation income to claim before tax in the first full financial year alone. Investment homes built from today to the last ten years attract annual depreciation within the vicinity of $4,000 - $12,000. This is where it pays to have a top notch depreciation schedule prepared, to enable you to claim depreciation on a newer investment home. More income in the kitty for you, simply for renting out your home and/or providing a rental home to someone else.



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