September 2026
‘Is there any point investing in used property anymore?’
Sure, there have been the usual questions about repairs, improvements, and Special Levies, but that May Budget prompted investors to ask us this question – “Is there any point investing in used property anymore?”
The same question was asked in 2017 when there were changes made to depreciation. It always has and always will make sense to invest in used property. Many investors will always gravitate to used property because they are more confident in the growth prospects.
The objectives don’t change, but the strategies do.
A lot of people don’t realise that the recent changes to Negative Gearing and CGT still allows property investors to apply losses from rental properties against income from other residential properties – including capital gains. You can read more on this here from the ATO’s Tax Explainer: tax-explainers-negative-gearing-capital-gains-tax-ato.
Savvy investors who hold property that qualifies for negative gearing are right now pondering a Property Offset Strategy.
They are pulling equity out of their properties purchased before the budget changes and using that equity to buy second hand properties that may be positively geared.
Then they are using all available deductions, including depreciation (a non cash deduction) to pull those newly purchased investment properties back to a neutral geared status.
‘Can I claim deductions on my Airbnb if I use it myself sometimes?’
The Airbnb squeeze got tighter earlier this year, though a lot of investors didn’t notice the latest changes.
Already, short term rental platforms report income direct to the ATO and some councils are limiting the number of days in a year a property can be rented short term.
Now the ATO has said that deductions like interest payments, rates, strata fees, depreciation etc can only be claimed if the property is ‘mainly’ available to let. The problem is that ‘mainly’ is up to interpretation, and the ATO’s interpretation is likely to have less wriggle room than a property investor’s.
When push comes to shove, the onus will be on you to prove the property was ‘mainly’ available to let and any private usage was incidental. If you use 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.
You can read more on this from the ATO here.
‘If I replace a cooktop, how is the old one treated?’
Let’s back up a step.
If a cooktop needs to be repaired, you claim that repair as an immediate deduction. A repair to a cooktop might be a new element, or a switch.
But there will come a time when a cooktop is not worth repairing and needs to be replaced.
That new cooktop will need to be depreciated. It is likely that the cost will be less than $1,000, so it can go into the Low Value Pool. Items that enter the Pool depreciate at 18.75% in the first full year and 37.5% per year after that. Yes, they depreciate quickly.
A $800 cooktop depreciates at $150 in the first part year – even if that part year is only a few weeks. Year 2, the depreciation is $243. And so on.
Now, what about that cooktop that was replaced? In every case we have ever seen, that old cooktop will be in the Low Value Pool. One of the rules of the Pool is that items in the Pool keep depreciating even if they get disposed of. So that old cooktop will keep depreciating.
You can read more on the Low Value Pool here.
If you have replaced an item item that needs to be added to your Depreciation Schedule, you can read more on how to do this here.
‘Can I claim renovations if I did them myself?’
Yes, and no.
Lots of people do renos themselves to save money. And the ATO don’t have a problem with them claiming depreciation for materials they buy.
But people are sometimes dismayed when we tell them they are not able to claim compensation for their own labour. ‘But I spent every weekend for two months doing that kitchen?’, is something a client said recently.
Yep. And they would have saved a fair bit of money doing that work themselves. Maybe they enlisted the help of a few mates and got the electrics and plumbing done for beer and pizzas.
If somebody manages to do a renovation themselves with some unpaid help from mates, the ATO will be happy for them. They will be unhappy if there is then an attempt to claim for ‘labour’ associated with that renovation.
Keep a record of all material costs (not pizzas) associated with a renovation and you can claim them.
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.
