Tax time tips: Top depreciation questions answered

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First published 28 May 2025

With 30 June approaching, savvy property investors are looking for smart tax time tips to minimise tax and improve cash flow. Among the most overlooked yet valuable tools at your disposal is tax depreciation – the second-largest tax deduction available to property investors.

Put simply, tax depreciation is a non-cash tax deduction for the decline in value of your investment property’s structure and its assets. It helps reduce your taxable income and boost your cash return at tax time. Learn more about how depreciation works

Whether you’re a new or seasoned investor, understanding how to claim depreciation correctly at tax time can make a significant difference. These tax time tips, based on frequently asked depreciation questions, will help you get the most from your investment before end of financial year.

Can I claim depreciation for part of the financial year?

A common misunderstanding is that depreciation can only be claimed if a property is rented for the entire financial year, but that’s not true. You’re entitled to claim depreciation from the moment your property is first available for rent even if no tenants move in straight away.

For example, if your investment property was listed for lease in March but remained vacant through to June, you can still claim depreciation for that period. The key is that the property was genuinely available for rent.

Tax time tip #1: Even short rental periods count. Get your depreciation schedule early so every eligible day is captured because every dollar adds up.

Can I claim depreciation on a second-hand property?

This is one of the most common depreciation questions we hear from investors. The answer is yes, but with important conditions.

If you purchased a second-hand residential property after 9 May 2017, current legislation means you typically cannot claim depreciation on existing plant and equipment assets (such as ovens, carpets, or air conditioners) that came with the property. These assets are considered previously used and are excluded from deductions under the amended rules.

However, you can still claim capital works deductions on the structural components of the building – such as walls, floors, windows, and fixed assets like driveways and fencing – provided the property was built after 16 September 1987 or has undergone eligible renovations.

Even better, if renovations were completed by a previous owner, you will still be entitled to claim the remaining value of those improvements. These might include upgraded bathrooms, kitchens, extensions, or outdoor living areas, all of which can hold significant depreciable value.

Tax time tip #2: Just because the property is second-hand doesn’t mean you’ll miss out. A depreciation schedule will identify every eligible deduction available under current legislation. BMT has found that 66% of properties have qualifying works, making a site inspection crucial to ensure all deductions are captured.

Do I need to update my depreciation schedule?

A depreciation schedule isn’t a set-and-forget document. If you’ve made any changes to your property or ownership structure, you’ll need to update your schedule to keep your claims accurate and compliant. This ensures you’re not missing out on valuable deductions.

You should update your schedule if you’ve:

  • Completed renovations or upgrades, such as kitchen remodels, bathroom refurbishments, or extensions
  • Replaced depreciable assets, including appliances, flooring, blinds, or hot water systems
  • Changed the ownership structure, such as adding a spouse, business partner, or transferring ownership shares
  • Converted your primary residence into a rental property, which makes it eligible for depreciation
Tax time tip #3: If you’ve made any changes to your property, now’s the time to update your depreciation schedule. Failing to do so can result in underclaiming – and that means leaving money behind at tax time. Update your schedule before 30 June to ensure it reflects your current entitlements. It’s quick and easy to do using BMT’s free MyBMT portal, helping you claim every dollar you’re entitled to.

Is the cost of the depreciation schedule tax deductible?

Yes, the full cost of a depreciation schedule is 100% tax deductible. And if you pay for it before end of financial year, you can claim it in your current tax return.

The bonus? You only need to order a schedule once for each property – but it keeps delivering tax deductions for years.

Tax time tip #4: Pay for your depreciation schedule before 30 June and claim the cost back straight away.

Can I back-claim missed tax depreciation?

This is one of the most important depreciation questions as many investors are surprised to learn they can still benefit from tax depreciation, even if they haven’t claimed it in previous years. If you’ve owned your investment property for a while and either didn’t claim depreciation or didn’t claim it correctly, you should be eligible to amend previous tax returns.

This process, known as back-claiming, allows you to unlock missed deductions and potentially receive a larger refund or reduce a tax liability. Whether you forgot to organise a depreciation schedule or weren’t aware you were eligible, it’s not too late to take action.

Tax time tip #5: Think you’ve missed out? Speak with your accountant about amending your returns and provide them with a tailored depreciation schedule. Even a single year of missed deductions can mean thousands in lost tax savings, so it’s worth checking.

Can my accountant organise the depreciation schedule?

Absolutely. Many investors choose to have their accountant coordinate the process – especially during the busy tax season when time is limited and accuracy is critical. Having your accountant handle it ensures your depreciation schedule is seamlessly integrated into your overall tax strategy.

At BMT, we have long-standing relationships with accountants and financial advisers across Australia. We work closely with them to prepare accurate, ATO-compliant depreciation schedules that align with your financial goals and reporting requirements. This collaborative approach not only streamlines the process for you but also ensures no eligible deductions are missed.

Tax time tip #6: Whether initiated by you or your accountant, BMT ensures the entire process is smooth, professional, and hassle-free, so you can focus on maximising your return.

Can a depreciation schedule be split between co-owners?

Yes. If a property is co-owned, the depreciation schedule can reflect the correct ownership percentages – whether it’s 50/50 between a couple or 70/30 with a business partner.

This means:

  • Each owner claims their share of deductions
  • Each can benefit from low-value pooling and immediate write-off individually
  • Capital gains tax calculations are simplified at sale time
Tax time tip #7: Sharing property ownership? A split tax depreciation schedule may increase deductions for both parties because assets qualify for increased depreciation rates based on the owner’s interest in an asset – not the total value. Make sure it’s structured properly before tax time.

Why are these tax time tips so valuable?

Every year, thousands of investors miss out on legitimate tax deductions simply because they don’t ask the right depreciation questions – or they act too late. These tax time tips aren’t just general advice; they’re backed by the ATO’s guidelines and years of expertise in property tax depreciation.

By taking action now, you can:

  • Reduce your taxable income
  • Improve short-term cash flow
  • Strengthen your investment strategy over time
  • Stay fully compliant with ATO requirements
Tax time tip #8: End of financial year doesn’t need to be stressful. The right plan, tools, and expert advice will make tax time your most rewarding time of year.

Final tax time tip: Don’t wait until it’s too late

The 30 June deadline is non-negotiable. If you want to claim the cost of your depreciation schedule or update it based on recent improvements, now is the time to act.

Investing in a depreciation schedule before end of financial year isn’t just about this year – it lays the foundation for consistent tax savings for the life of your investment property.

These tax time tips are simple, effective, and proven to help you claim more, save more, and grow more from your investment property – year after year.

Request a Quote or call 1300 728 726 today to get started.

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