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Deferred Depreciation

Deferred Depreciation is a tool experienced investors use to reduce their future Capital Gains Tax debt. It’s something buyers of second hand properties can make use of. If you started renting out an investment property after 30/06/17 and that property was over 6 months old at the time, you’re entitled to a Capital Gains deduction when you sell that property.

The tricky part is working out how much of a Deferred Depreciation deduction you can claim. You’re entitled to offset your Capital Gains by the amount the assets in the property depreciated while you held the property.

That’s the difference between what the assets were worth when it became your investment property and what those assets are worth when you sell it. If you hold onto a property for a few years the assets will drop in value (depreciate) due to wear and tear. That’s things like carpet, dishwashers, rangehoods, etc. Our Deferred Depreciation Schedules lay this out clearly and for NO addition fee (read more below the table).

Why is it called deferred depreciation? Well, you can’t claim the depreciation yearly like you can on the building, but you can ‘defer’ the depreciation claim till the time you sell.

We’ve included a handy reference table below to show when Deferred Depreciation applied and when yearly Depreciation is claimable for assets.

Investment Property Reference Table

	Treated differently after 2017 Budget	Building Depreciation	Asset Depreciation	Deferred Depreciation
New residential property or less than 6-Months old	No	Yes	Yes	No
Commercial property	No	Yes	Yes	No
Used residential property exchanged before 10/05/17 Leased after 30/06/17	Yes	Yes	No	Yes
Used residential property exchanged before 10/05/17 Leased prior 01/07/17	No	Yes	Yes	No
Used residential property exchanged after 09/05/17	Yes	Yes	No	Yes
*Substantially renovated residential property exchanged after 09/05/17.	No	Yes	Yes	No
Residential property owned in Company Structure	No	Yes	Yes	No