Can I claim a full house of furniture in the first year?

Not in full. Each piece of furniture is depreciated over its effective life, not written off immediately. However, you can use the low value pool for items under $1,000 to accelerate the deductions.

What if I replace furniture that is worn out?

You can scrap (write off) the remaining value of the old item when you dispose of it, and then begin depreciating the new replacement item from its purchase date.

Do I need receipts for every piece of furniture?

Yes, ideally. The ATO requires documentation for depreciation claims. Keep all invoices for furniture purchases. For items already in the property when you bought it, a quantity surveyor can assess values from available information.

Can I claim furniture in a short-term rental?

Claiming furniture in your short-term rental

A well-furnished short-term rental property has a significant depreciation advantage. Every piece of furniture represents a depreciating asset that can reduce your taxable income each year.

What counts as depreciable furniture

Furniture and furnishings in your short-term rental are Division 40 plant and equipment. Common items include:

| Asset | ATO Effective Life | |-------|--------------------| | Sofas and couches | 10 years | | Beds and bed frames | 13.3 years | | Dining tables and chairs | 13.3 years | | Coffee tables | 10 years | | Wardrobes (freestanding) | 13.3 years | | Outdoor furniture | 10 years | | Bookcases and shelving | 6.67 years | | Mattresses | 10 years |

These effective lives are used to calculate annual depreciation under either the prime cost method (straight-line) or the diminishing value method (accelerated in early years).

Immediate deductions for low-cost assets

Items costing less than $300 and with an effective life of less than one year can be claimed immediately in the year of purchase. Most individual furnishing items do not qualify for this (since they have effective lives of more than one year), but it applies to items like:

Cushions and decorative items
Kitchen utensils
Towels and linen sets (per item, not per set)

Low value pool for faster depreciation

Assets costing between $300 and $1,000 can be pooled in the low value pool:

Depreciated at 18.75% in the first year
Then 37.5% per year until fully written off

This is typically faster than using the ATO effective life method, and simplifies record-keeping.

Apportionment for private use

If you use the property personally for any period, all furniture depreciation must be apportioned based on your rental use percentage. Only the rental use proportion of each year's depreciation is deductible.

New furniture vs inheriting furnished property

Furniture you purchase new for the property can always be claimed in full (subject to apportionment). If you purchased the property furnished and second-hand after 9 May 2017, the pre-existing furniture is subject to the residential plant and equipment restrictions.

Written by Koste Team · Koste Chartered Quantity Surveyors · AIQS Member · RICS Member · TPB Registered · 1300 669 400 · info@koste.ai