Frequently Asked Questions | Koste Chartered Quantity Surveyors

Frequently Asked

Have a question?

My property has been refurbished can I depreciate these costs?
Most older style properties had undergone some sort of refurbishment work. Whether it is a new kitchen or bathroom, the work will attract depreciation. Most importantly, our Quantity Surveyor will be able to establish the cost of the works, even if you don’t have receipts to include within your depreciation schedule.
I have been told my property is too old to depreciate
We found very few properties which are not worthwhile depreciating. In fact, even if your property was built pre 15 September 1987 and no longer eligible for Division 43 (Building Allowances), you will still be eligible for Division 40 (Plant and equipment) depreciation.

In addition to this, your property may have undergone refurbishment works more recently. It will also attract both building allowances and plant and equipment depreciation. Therefore, it is worthwhile to talk to a qualified Quantity Surveyor before you decide the property is too old for depreciation deductions.

How do you estimate the costs for the depreciation schedule
Koste employs qualified Quantity Surveyors with years of industry experience needed to complete accurate depreciation schedules. The ATO have recognised that Quantity Surveyors are one of the few professionals to have the appropriate skills to calculate the cost of items for the purposes of depreciation in accordance with TR 97/25. We prepare depreciation schedules for all property types, estimating the historical construction costs using our extensive cost databases and inhouse resources.
Do I need a site inspection?
Where possible we would certainly recommend a site inspection by a qualified inspector. The inspectors are highly trained to identify qualifying assets, pick up renovation works and estimate costs of construction work. It is however not always possible to complete a site inspection, due to a number of reasons. Where this is the case, Koste will pass on the saving for the survey fee to our clients.
When will my report be issued?
Koste prides itself on getting out reports for our clients within a few days after payment is made in full and the site inspection being completed. There are circumstances which are beyond our control including obtaining entry notices from agents and tenants providing our team with access to complete the site inspection. Where you have a urgent request for your report, we will do our best to prioritise this for you.
Will the new Government Legislation affect me? I Bought My Property After 9th May 2017?

The Government made some changes affecting Division 40 (Plant and Equipment) assets on properties acquired after the 9th May 2017 7:30 pm AEST which were classified as second hand.

Koste still includes Division 40 assets in your report, as you can still claim the deduction as a capital loss. It is equal to the difference between an asset’s original cost/value and its termination value. In the other words, it may be offset against any future capital gain. Please note that the new legislation does not affect new assets purchased for the second-hand property. Subsequently, new assets will be deducted in the usual way and shown in your report.

The Government changes do not restrict the ability of an investor to claim Division 43 building write-off deductions for a residential rental property acquired after 7.30 pm on 9 May 2017.  Depreciation claims in respect of commercial properties and properties used in the course of carrying on a business will also not be affected by the recent depreciation changes.

Any questions of further details can be sought by calling a member of our technical team on 1300 669 400 or contact us via our chatbot.

Which package should I choose?
Our most popular package is Gold, where all you need to do is to provide some basic information and the access contact, we will arrange the site survey with the property manager or the tenants on your behalf and will produce the report with all the basic inclusions in the property. However, if you are very familiar with your investment property or if you can provide comprehensive property specifications and construction drawings, Silver will be suitable for you, where we will base on the information provided to complete the depreciation report. Platinum is our most inclusive package, which will cover the depreciation of future, asset write-offs, as well as unlimited future updates of your depreciation report, and more.

Still unsure? Talk to us via online chat or phone us at 1300 699 400, or drop us an email  by

What is the difference of a depreciation report and a valuation report?
A depreciation report shows the yearly tax depreciation of your investment property for a series of years, which can be used at your tax return to help reduce your taxable income and thus reducing your tax payable. The depreciation calculation is based on the construction cost with a fair allowance for the purchase price. A valuation report shows the value of your property at a specific time point that you can use to calculate your capital gain or loss when you sell the property. The valuation of a property is based on the market condition as well as many other property attributes.
Is it worth to have a depreciation report if the property is more than 10 year’s old?
This will be a case by case scenario and will also need to take account of when you made the purchase (referring to the next question). Technically speaking, the depreciation of capital structures will be 40 years, which include both the originally constructed structures and any other additions in the years after, starting from the time when that structure was established. However, the value of the depreciation varies due to the condition of the property as well.
Is it worth to have a depreciation report if I purchased a property after 9 May 2017?
This will also be a case by case scenario. If the purchased property is brand-new or is under the company, the trust or the super fund (other than SMSF), the new legislation amendment will not affect the depreciation. If the purchased property is second-hand and is not under the company, the trust or the super fund (other than SMSF), the depreciation will be limited to Division 43 Capital works and new assets only. Second-hand assets in Division 40 Capital allowances will be counted as capital loss, instead of depreciation.
What is the difference between Division 43 - Capital works and Division 40 - Capital allowances?
To make it easy to understand, capital works refer to any fixed structure such as walls, roofs, driveways, fences, carports etc; while capital allowances generally refer to any removable assets such as light fittings, air conditioning units, blinds, carpets etc. Those items usually have a much shortly effective life than 40 years. To distinguish these two different categories is important, as Australia tax legislations have different treatments in terms of the depreciation.
I just changed my main occupancy to an investment property, how will the depreciation be affected?
The depreciation for any second-hand property that becomes rental property after 1 July 2017 will be limited to Division 43 Capital works and new assets only, if the property is not under the company, the trust or the super fund (other than SMSF). Second-hand assets in Division 40 Capital allowances will be counted as capital loss, instead of depreciation.

Consider the following illustrative scenario as an example:

You purchased your first home in May 2015 and lived there until Jan 2019. In Dec 2015 when you were living there, you installed solar panels and added a carport. In Jan 2019 when you were moving out, you upgraded the cooktop and oven to attract tenants. In Sep 2019 when the tenants were living there, you changed a broken ceiling fan. Can the items mentioned above all be counted as your depreciation?

changed a broken ceiling fan. Can the items mentioned above all be counted as your depreciation?

Therefore, we always request our client to provide any expenditures incurred with descriptions, installation dates and costs.

Some companies have less years, does that mean they give you more depreciation each year?

We show 40-year schedules for both the diminishing value method and the prime cost method. In other words, your tax depreciation report is valid for 40 years. ATO sets the effective life of capital allowances and capital works for the items. Therefore, the amounts of depreciation each year will not be increased by showing fewer years in the schedule.

Can you claim tax depreciation from your Overseas properties?

As an Australia resident for tax purposes, you are eligible to claim tax depreciation from your overseas investment properties. Our Directors have experience in completing Tax Depreciation Schedules on many properties throughout cities of the world including Dubai, London, Singapore, New York, and Auckland. Furthermore, Our team uses local construction costs to calculate build costs, utilizing the current exchange rates between the property location currency and Australia (AUD). 

Can I backdate my depreciation claims?

Yes, you can amend your previous tax returns to include missed depreciation deductions, typically up to two years, as per the amendment provisions in the Income Tax Assessment Act 1997 (ITAA 1997). Consult your tax advisor for specific guidance.

How does depreciation work for commercial properties?

Depreciation for commercial properties includes both Division 43 (Capital Works) and Division 40 (Plant and Equipment) of the ITAA 1997. A tailored depreciation schedule can help maximise deductions by identifying eligible assets and their effective lives. Learn more about our Commercial Tax Depreciation Services

What changes were made to depreciation laws in the 2017 budget?

The 2017 budget changes, effective from 1 July 2017, affected second-hand properties. Properties purchased after 9 May 2017 can no longer claim depreciation on previously used Plant and Equipment assets, as outlined in the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017. Capital Works deductions remain unaffected.

How often should I update my depreciation schedule?

Update your depreciation schedule whenever significant changes or improvements are made to your investment property to ensure accuracy and claim all available deductions. Regular reviews can help identify new assets eligible for depreciation.

Can I claim depreciation on my investment property?

Yes, you can claim depreciation on both new and old investment properties under Division 40 (Plant and Equipment) and Division 43 (Capital Works) of the ITAA 1997. Learn more about Tax Depreciation.

What is the difference between Division 40 and Division 43?

Division 40 covers depreciation of Plant and Equipment assets, which are removable items like appliances and furniture. Division 43 covers Capital Works deductions, which include structural and fixed items like walls, roofs, and kitchen cabinets. These sections are part of the ITAA 1997.

Can I claim depreciation on renovations done by a previous owner?

Yes, you can claim Capital Works (Division 43) deductions for renovations done by previous owners if the renovations were completed after 27 February 1992, as per ITAA 1997 guidelines.

Is it worth getting a depreciation schedule for an older property?

Yes, even older properties can yield substantial depreciation deductions, especially if renovations have been done. A Quantity Surveyor can assess and provide an accurate depreciation schedule, ensuring compliance with ITAA 1997.

What is a tax depreciation schedule?

A tax depreciation schedule is a detailed report prepared by a qualified Quantity Surveyor that outlines the depreciation deductions available for an investment property, as per Division 40 and Division 43 of the ITAA 1997. It helps property investors maximise their tax deductions. Order a Tax Depreciation Report.

How can I maximise my depreciation deductions?

To maximize your depreciation deductions, ensure you have a detailed and comprehensive depreciation schedule prepared by a qualified Quantity Surveyor. Regularly update your schedule to include new assets or improvements to your property, as specified in ITAA 1997.

What are immediate write-offs and how do they apply?

Immediate write-offs, as defined in ITAA 1997, allow you to deduct the full cost of certain assets in the year they are purchased. These typically apply to assets under a specific value threshold, updated annually by the ATO.

Can I claim depreciation on partial property ownership?

Yes, if you co-own a property, you can claim depreciation based on your ownership percentage, as outlined in ITAA 1997. Each owner should obtain a depreciation schedule reflecting their share of the property.

What records do I need to keep for depreciation purposes?

Maintain detailed records of purchase dates, costs, and descriptions of all assets and improvements. This documentation supports your depreciation claims and ensures accuracy in your schedule, complying with ITAA 1997 requirements.

Can I claim depreciation if my property is newly built?

Yes, newly built properties are eligible for depreciation deductions. You can claim both Plant and Equipment depreciation (Division 40) and Capital Works deductions (Division 43) as per ITAA 1997.

How long can I claim depreciation on my property?

Depreciation can typically be claimed for 40 years from the construction completion date for Capital Works (Division 43) and over the effective life of assets for Plant and Equipment (Division 40), as per ITAA 1997.

What is plant and equipment depreciation?

Plant and Equipment depreciation refers to the deduction of the decline in value of removable assets within a property, such as appliances, carpets, and furniture, under Division 40 of the ITAA 1997.

What is capital works depreciation?

Capital Works depreciation refers to the deduction for the decline in value of structural and fixed items within a property, such as walls, roofs, and plumbing, under Division 43 of the ITAA 1997.

Are there any tax benefits for energy-efficient upgrades?

Yes, energy-efficient upgrades can provide additional tax benefits. Ensure these improvements are included in your depreciation schedule to maximize your deductions, as per relevant sections of ITAA 1997.

Can I claim depreciation on a holiday rental property?

Yes, holiday rental properties are eligible for depreciation deductions. Both Plant and Equipment and Capital Works can be depreciated, in line with ITAA 1997 guidelines.

How does a depreciation schedule benefit me at tax time?

A depreciation schedule helps you claim maximum tax deductions for the depreciation of your property’s assets and improvements, reducing your taxable income and increasing your cash flow, in accordance with ITAA 1997. Learn more about our Services.

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