Tax Depreciation | 5 min read
Plant and equipment depreciation for residential property investors
Plant and equipment depreciation can be valuable, but residential property rules are technical. Investors should avoid relying on generic advice.
What plant and equipment means
Plant and equipment generally refers to depreciating assets with a limited effective life, such as certain appliances, floor coverings, blinds and other eligible items.
These are different from capital works, which relate to the building structure and construction expenditure.
Why residential rules need care
Residential plant and equipment deductions can be affected by purchase date, whether assets are new or previously used, and how the property is held.
A report should separate eligible capital works and plant items so your accountant can apply the correct treatment.
Do not guess from generic lists
Property depreciation is not just a checklist of assets. It involves eligibility, costing, effective life, ownership and tax law considerations.
That is why investors often benefit from a quantity surveyor who specialises in depreciation reporting.
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
Is Division 40 the same as Division 43?
No. Division 40 generally relates to eligible plant and equipment. Division 43 relates to capital works and building construction expenditure.
Can used residential assets be claimed?
Generally, second-hand plant and equipment in residential investment properties cannot be claimed if acquired after 7:30pm on 9 May 2017. The change does not apply in the same way to non-residential property, and it did not remove building or capital works claims.
Key exceptions may apply where: - The property is held by a company or other corporate tax entity. - The property is held by a large super fund, excluding SMSFs. - The property was purchased, or the contract signed, before 7:30pm on 9 May 2017. - A former home became income-producing before the relevant 2017 cut-off dates.
Capital works deductions may still be available, so older or second-hand properties can still be worth reviewing. Your accountant should confirm how the rules apply to your circumstances.