Tax Depreciation | 6 min read
Does my tax depreciation schedule need an update?
A tax depreciation schedule is often prepared once and used for many years, but it may need to be reviewed when the property, ownership details, use of the property or available supporting information has changed.
When a schedule usually does not need updating
A professionally prepared depreciation schedule should generally provide your accountant with deductions over the effective life of the relevant assets and capital works.
If the property has remained an income-producing rental property, there have been no renovations or major replacements, no new plant and equipment has been installed, and the original report still reflects the property, your accountant may be able to keep using the existing schedule each year.
The important question is not simply how old the schedule is. The better question is whether the schedule still reflects the property and the deductions available today.
When your depreciation schedule may need an update
Your tax depreciation schedule may need to be reviewed if there has been a change to the property since the report was prepared.
Common triggers include a kitchen or bathroom renovation, new flooring, new blinds, air conditioning, heating, hot water upgrades, electrical works, cabinetry, extensions, decks, fencing, insurance works, strata common property upgrades or a change from private use to rental use.
Some of these items may fall under capital works. Others may be depreciating assets. The tax treatment can differ, which is why a proper review matters.
Renovations are the main trigger
Renovations are one of the most common reasons investors need to review their depreciation schedule.
A renovation can add new deductions, remove old assets, change the remaining value of existing items or create a mix of capital works and plant and equipment claims.
This is where many investors under-claim. They keep using the old schedule even though the property no longer matches the report.
New assets need clear records
If you have purchased new assets for your rental property, your accountant may need the correct cost, installation date, asset type and depreciation treatment.
New assets might include ovens, cooktops, dishwashers, split-system air conditioners, ceiling fans, carpets, blinds, hot water systems, security systems or furniture for eligible furnished rental scenarios.
An updated depreciation schedule helps organise these items so your accountant can apply the right treatment.
Changing a home into a rental property
If a property was previously your home and later became an investment property, depreciation can become more technical.
The date the property became available for rent, whether assets were previously used privately, and what construction or renovation information is available can all affect the depreciation position.
This is not an area where guesswork is helpful. A quantity surveyor can review the property details and advise whether a depreciation schedule, or an update to an existing report, is worthwhile.
Do you need a new report or only an update?
Not every situation requires a full new depreciation schedule.
Depending on the property and the existing report, BWK Group may recommend continuing to use the current report, updating the existing schedule for new works or assets, reviewing the report for your accountant, or preparing a new tax depreciation schedule where the existing report is unsuitable.
The right option depends on the quality of the existing schedule, the nature of the changes and the information available.
Next step
Want to see what a professional report includes?
If you are not ready to request a quote, request sample report formats first. You can review the structure, assumptions and level of detail before deciding which report is right.
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FAQs
Common questions
Does a tax depreciation schedule need to be updated every year?
Usually, no. A well-prepared depreciation schedule is generally used by your accountant each year. It may need updating when the property changes, new assets are installed, renovations are completed or the original report no longer reflects the property.
When should I update my depreciation schedule?
You should consider an update after renovations, extensions, insurance repairs, major replacements, new plant and equipment purchases, ownership changes or a change from private use to rental use.
Do renovations change my depreciation claim?
They can. Renovations may create new capital works deductions, new plant and equipment deductions, or change how existing assets are treated. The invoices, timing and property use all matter.
Can I use an old depreciation schedule from the previous owner?
You should not assume it is suitable. A schedule prepared for a previous owner may not reflect your purchase date, ownership details, tax position or later works. Have it reviewed before relying on it.
Can my accountant just add the new items?
Your accountant can apply depreciation claims in your tax return, but a quantity surveyor is usually better placed to identify construction costs, classify building works and prepare the updated depreciation schedule.
What records do I need for a depreciation schedule update?
Useful records include renovation invoices, builder and trade invoices, appliance receipts, installation dates, photos, insurance repair scopes, strata notices, settlement documents, rental availability dates, previous depreciation schedules and accountant correspondence.