Depreciation Case Study


Following the Federal Budget Address on Tuesday May 9th, 2017, the Government has made significant changes to the way investors can now claim tax depreciation deductions. One of the key points of the new legislation is that Investors who purchase a second-hand property after May 9th, 2017 will no-longer be entitled to claim depreciation on any “previously used” Plant & Equipment assets. These items include blinds, carpet, ovens, air-conditioners etc.


This is leading many people to believe that there is no benefit in proceeding with a depreciation report if they purchased an older property after the 2017 announcement. The fact is, these owners could be missing out on THOUSANDS of dollars in tax deductions.


Consider the following case studies of two recent clients of ours.


Client One:

Jenny purchased a 2 bedroom, 1 bathroom Unit in a small block in Sydney’s Eastern Suburbs for $920,000 Jan 2018. The property was built in the 1960’s and it was clear that a previous owner had renovated the kitchen and bathroom. Whilst the was no depreciation deduction available for the original structure or the existing plant and equipment items, Jenny is able to claim on the Capital Works component of these previous renovations.

Washington Brown was able to achieve an ATO-compliant deduction of $515 per year for the next 23 years. That’s over $5000 in deductions over the first 10 years!


Client Two:

Allan purchased a 2 bedroom, 2 bathroom Unit in a block of 8 in Paddington for $880,000 in July of 2016. The property was built in the 1970’s and had renovations to both bathrooms, the kitchen and blinds. As Allan bought the property before the Budget changes in May 2017 and the property was income-generating in the 2016/2017 financial year, he is able to claim depreciation on the existing Plant and Equipment items and the structural component of the previous owner’s renovation.

Washington Brown was able to achieve the following ATO-compliant deductions for Allan.


Years Diminishing Value
Year 1 $5,000
Year 2 $3,000
Year 3 $2,000
Year 4 $2,000
Year 5 $1,000


As a client of Local Agency Co, you are entitled to a free preliminary assessment of your property from Washington Brown to see if there are depreciation deductions available to you. Speak to the team at Local Agency Co. to take advantage of this offer.


Let’s get started with a free preliminary assessment of your property