Can tax depreciation be claimed on renovations completed by the previous owner?

Yes, and this is where Quantity Surveyors can add serious value with a rental property depreciation schedule. It does not matter if the works were undertaken by a previous owner. When an investment property is purchased the property investor has also purchased the entitlement to make a depreciation claim on all of the property’s improvements.

Most houses 10+ years old will have had works done. The most typical being: 

  • Bathroom – commonly worth up to $25,000 
  • Kitchen – commonly worth up to $30,000 
  • Floor & Wall Tiles – commonly worth up to $10,000 

On a 10-30 year old property there is $65,000 right there which could be detailed in a tax depreciation schedule. 

If a client is about to renovate an investment property it may be worth recommending a pre-renovation inspection. This inspection allows a Quantity Surveyor to identify what assets or capital works are going to be demolished or thrown out. Value can be assigned to these assets and they can be written off as an immediate tax deduction. A pre-renovation inspection and ‘scrapping report’ can save thousands which can offset the loss made through the renovation period.