The Myth: "Old Properties Don't Have Depreciation"
This is one of the most damaging misconceptions in Australian property investment. Many investors who buy established properties assume there's nothing to claim and never order a depreciation schedule. In many cases, they're leaving thousands of dollars in legitimate tax deductions unclaimed every year.
The reality is more nuanced — and more favourable.
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What You Can Still Claim on an Older Property
Division 43 — Capital Works
If your investment property was built after 18 July 1985, you can still claim Division 43 capital works depreciation. The 2.5% rate applies for 40 years from the original construction date — so a property built in 1995 still has potential capital works deductions available until 2035.
Example: A property built in 1998 with a construction cost of $180,000:
- Annual Division 43 deduction: $4,500 (2.5% × $180,000)
- Years remaining (from 2026): 12 years
- Total remaining deductions available: $54,000
Division 40 — Items You Have Installed
Even if the 2017 budget rules mean you cannot claim depreciation on the Division 40 assets that were in the property when you bought it, you can claim on:
- Any assets you have replaced since buying (new carpet, new hot water system, new air conditioners)
- Any items you have added (additional split systems, new appliances)
- Any renovations that involved installing new plant and equipment
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What You Cannot Claim (After the 2017 Changes)
If you purchased a residential property after 1 July 2017 that was previously used as a residential dwelling, you cannot claim Division 40 depreciation on the assets that were already in the property at the time of purchase.
However, you can still claim:
- Division 43 (building structure)
- Any new assets you install after settlement
- Renovations completed by you
The Real Calculation: Is It Worth the Cost?
A Koste residential depreciation schedule starts from $595. The question is whether the resulting deductions exceed the cost.
Case study — 1999 townhouse, Brisbane:
- Purchase price: $480,000
- Estimated construction cost (QS-assessed): $220,000
- Annual Division 43 deduction: $5,500 (2.5% × $220,000)
- New carpet installed post-purchase: $8,000 → Year 1 deduction: $800 (DV)
- Total first-year depreciation: $6,300
- At 37% marginal tax rate: $2,331 in tax saved
- Cost of schedule: $595 (also tax-deductible)
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When Is It NOT Worth Getting a Schedule?
There are a few situations where a schedule may not be worthwhile:
- Pre-1985 buildings where no renovations have been undertaken and you have not installed any new assets
- Properties where you have zero marginal tax rate (unusual for investment property owners)
- Properties where you have already claimed the maximum (you've held it since construction and the 40-year period is complete)
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How Koste Assesses Older Properties
For older properties without original construction documentation, Koste's Chartered Quantity Surveyors use:
- Historical construction cost data adjusted for the year of construction
- ATO-approved methodology for estimating original costs
- Physical inspection findings to identify claimable improvements
- Comparison with similar properties and verified cost databases
Use our free Tax Depreciation Calculator to get an instant estimate for your property, or contact Koste to discuss your specific situation.