Depreciation Schedule

The ATO has a “Guide to depreciation” which explains it.. and any accountant’s tax software creates one for you as well..

If you are unsure of a depreciation schedule, first its best to understand what depreciation is. I recommend any new or would be property investors to research this and if unsure, solicit a company to produce one for you as many people miss out on legitimate deductions in this area. They are called a Quantity Surveyors Report.

A spreadsheet is ideal and I am certain that someone will provide you with a good one. EZ-Rent works out depreciation for you as well.

In effect it is a list of items in your property (fittings, carpets, air conditioners, curtains, etc) that lose value over time due to normal use and wear and tear.

They are legitimate items which you can claim as an expense of your property investment, but you cannot simply claim the cost in one year. The ATO make you claim it over the lifetime of the depreciable item.

Whats the lifetime? The ATO produces guidelines, but also allows you some flexibility in determining this..

Take an oven for an example. A realistic time frame for an Oven’s lifetime may be 10 years. If that oven cost you $1000, you can only claim a certain percentage of its cost in the first year, second year, etc.

Now there are different ways to depreciate items (prime cost vs diminishing value + low value pool, etc) and your property itself (the dwelling) is also depreciatble too as its the land that goes up in value (generally the value of the dwelling itself goes down over time)

Hope that helps..

P

EZ-Rent. The freeware tax and cashflow simulator for Australian property investors. Version 2.5 out now!
http://www.ez-rent.com