Tax Depreciation, Renovations & Plant and Equipment in Residential Investments
We’re often asked questions like:
- “My investment property is quite old, is it still worth getting a depreciation schedule?”
- “I’ve renovated, can I still claim anything?”
- “When can I claim plant and equipment assets?”
These are great questions, and the answers often depend on timing, ownership structure, and the type of improvements made, but in many cases the answer is still yes.
Renovations Can Still Deliver Value
Even if your property’s original structure is fully depreciated, renovations — whether completed by you or a previous owner, can unlock substantial tax depreciation benefits.
Major upgrades like kitchens, bathrooms, extensions, or even less visible improvements such as plumbing, waterproofing, and electrical rewiring can qualify for capital works deductions. A Quantity Surveyor can assess these improvements and estimate their value, even if they weren’t completed recently.
What Are Plant & Equipment Assets
Plant and equipment assets refer to the removable fixtures and fittings in a rental property — things like:
- Air-conditioners
- Blinds
- Carpets
- Hot water systems
- Smoke alarms
These assets depreciate based on their effective life as set by the ATO. However, legislation introduced in 2017 changed what can be claimed.
If you purchased a second-hand residential property after 9 May 2017, you can’t claim depreciation on existing plant and equipment, but you can claim depreciation on new assets you purchase and install after the property is income-producing.
Timing Tip: If you live in the property while renovating, new assets are considered “previously used” and can’t be claimed. To maximise deductions, install them after the property is available for lease.
Ownership Structure Matters
In regard to Plant and equipment your ability to claim depreciation may depend on whether the property is owned personally, through a trust, company, or SMSF. This affects both eligibility and how deductions are applied.
We always recommend speaking with your accountant to ensure your ownership structure supports your investment goals and tax strategy, and ultimately what deductions you are eligible for.
What If I Bought a Renovated Property?
If the property was substantially renovated before you purchased it, you may be eligible to claim depreciation on the capital works and possibly new plant and equipment depending, on your ownership structure.
A Quantity Surveyor can identify and estimate the value of these improvements, even if they’re not immediately visible.
Case Study: Hamilton, QLD
A great example of this is a 2018-built apartment in Hamilton, QLD. The property was owner-occupied as a principal place of residence (PPOR) from settlement, meaning it wasn’t eligible for original Division 40 plant and equipment depreciation.
Before leasing the property, the owner undertook a comprehensive renovation totalling $44,561, resulting in:
- $37,873 attributed to Division 40 plant and equipment
- $6,688 attributed to Division 43 capital works improvements
Because the renovation occurred after the property became income-producing, the owner was able to claim depreciation on the new assets — a great example of how timing can significantly impact deductions.
Get Advice Early
Whether you're planning a renovation, buying a renovated property, or wondering if your older investment is still worth assessing — the answer is usually yes. But timing, ownership, and the nature of the improvements all matter.
Engaging a Quantity Surveyor early and speaking with your accountant ensures you capture every eligible deduction and avoid missing out.