February 2026
The ATO flagged yet more changes to the rules around deductions for holiday homes late last year with a draft ruling that lobbed just before the holiday season. It created barely a ripple – with summer holidays looming there were more important things to think about, so nobody paid much attention. We’d best do that now.
We are doing more and more Depreciation Schedules on NDIS homes and there are a few opportunities in them that we know other providers overlook. How do we know? A client sent us a Depreciation Schedule provided by their builder.
Now is also a good time to look at when is the best time to get a Depreciation Schedule – and it’s not in tax season. You can make an enquiry online here to get the ball rolling.
Key Points
- 1. Short term rentals must be ‘mainly’ available to let in order to claim costs like depreciation.
- 2. NDIS properties generally have higher build costs, and that means more depreciation to claim from the ‘available for lease’ date.
- 3. When is the best time to get a Depreciation Schedule for a new property? Now!
- 4. If you’re keen to learn more about Depreciation and Depreciation Schedules, our website is a treasure trove of information. Start your journey with us here.
Short Term Rentals must be ‘mainly’ available to let.
You know the idiom ‘death by a thousand cuts’? It relates to an old Chinese torture (and curiously is the name of a Taylor Swift song).
In the torture context, small cuts are made that individually are not too bad, though perhaps messy. But the collective effect of those cuts is dire.
Owners of properties rented out short term have endured a few cuts of late, but this latest one for some might be the coup de grace.
An earlier cut was when the ATO instructed short term rental platforms to hand over details of payment records to landlords so the ATO could make sure the income was being declared. We have written about this before here.
Then some local councils started limiting the number of days a property could be available for short term rent. We’ve covered this here before, also.
But this latest cut could be the most cruel of all: Draft Taxation Ruling TR 2025/D1.
Like all draft rulings, it’s a bit vague and will be tightened up. And there would be an invitation for people to provide input, but that’s usually just a veneer of appeasement.
In a nutshell, people will only be able to claim costs like interest payments, rates, insurance, depreciation etc if the property is ‘mainly’ available to let. The problem being that ‘mainly’ is up to interpretation. And like repairs vs improvements, an investor’s perception will in many cases differ from the ATO’s.
If the property is not ‘mainly’ available to rent, owners will still need to declare the income, but they will only be able to deduct expenses like cleaning and advertising that relate to the rental period. Gone will be the possibility of claiming deduction for interest, council rates, depreciation etc.
And when push comes to shove, the onus will be on the owners to prove the property was ‘mainly’ available to let and any private usage was incidental. If the owners uses the property in peak holiday periods, they will not pass the ‘mainly’ test.
Similarly, if the rent asked seems inordinately high, or pets and kids are not allowed, or internet is not provided. You get the idea.
The ATO has said that this will be a particular focus.
There will probably be a fair few properties in holiday towns leaving the short term rental pool and being advertised as permanent rentals instead. And there will be a lot of used IKEA furniture ending up on FB Marketplace – or at local tips.
How Depreciation can help NDIS property owners.
Some investors in NDIS properties are not feeling too well themselves these days. It can be an expensive exercise building an NDIS home and in some places the promised tenants are thin on the ground.
A lot of owners don’t realise that they can claim depreciation from when the property is made ‘available to let’. In most cases, that is the handover day. You don’t need tenants in a property to be able to claim depreciation on it. (This of course applies to all properties, not just those built for the NDIS market.)
NDIS properties also give investors high depreciation returns, provided they get a Depreciation Schedule from a company that understands these properties – and not many do.
For a start, they can be expensive to build because often they contain non standard features. There are wider doorways, no steps (which ironically can be more expensive than installing steps), impact resistant plasterboard, double size bathrooms, sprinkler systems, provision for lifting cranes in the bedroom ceilings – that means concealed steel beams.
Then there are the Assets. Some that are included in NDIS properties are not found in standard rental properties, and that can boost the depreciation.
Vinyl flooring is often hospital grade. There are power back-up systems in case of blackouts. Kitchen benches sometimes have an adjustable portion for wheelchair users. A popular clothes drying system in the Foxdry, which is usually tucked away in the garage. And occasionally, there are very sophisticated and expensive fire services. Air conditioning systems can also be extensive – and expensive.
All of these things help explain why NDIS houses are expensive to build, but all thankfully boost the available depreciation – and boost the spirits of investors.
When is the best time to get a Depreciation Schedule?
People often ask us when is the best time to get a Depreciation Schedule.
‘Now’, we tell them. And they respond and say, ‘Yeah. I thought you would say that. Why?’
It’s often around settlement/handover that people call us. Things like depreciation can be top of mind then, and it’s a good idea with this sort of thing to strike while the iron is hot.
Around settlement/handover, properties are usually vacant, and that makes things easier if a property needs to be inspected. (Of course, not all properties need to be inspected and we have written about this before here.)
This is also the time when people might need to spend a bit of money on the property to get it ready to rent out and we can include those costs at the time rather than people having to recall things down the track.
Having a Depreciation Schedule prepared early is useful also when other expenses are incurred down the track – that’s where our free update service comes into its own. We last wrote about this here.
We have clients who come back to us every year to get their Depreciation Schedule updated and we don’t charge for that.
Depreciation Know-How
If you’re keen to learn more about Depreciation and Depreciation Schedules, or if you have a friend who would benefit from learning more, our website is a treasure trove of information.
Share this email, or start your journey here.
Do you have a residential or commercial property you would like us to help you claim depreciation for? Or a question about depreciation?
Order online now or call us on 1300 660 033 and rely on our 20-plus years of experience in estimating depreciation returns.
