Updated: January 2024
Tax Depreciation Categories for Appliances
Eligible depreciation items, including appliances, fall into one of two categories as set out by the ATO in the 1997 ITAA.
- Division 40 (Plant and Equipment) items
- Division 43 (Capital Works) items
Your quantity surveyor will work out which items go where when inspecting your investment property.
But generally speaking, appliances always go into the plant and equipment schedule.
Once complete, your depreciation report will be used by your accountant to save you as much tax as possible.
How much do appliances Depreciate each year?
The typcial residential applaiances such as ovens, cooktops and rangehoods depreciate by 8.33% per year in the Prime Cost schedule and as much as 16.66% per year in the Diminishing value schedule.
However, any of these appliacnes that cost less than $1,000 fully installed, can be claaimed at even higher depreciaiton each year. As much as 37.5% per year.
Depreciation schedule for appliances
Rental property appliance depreciation applies to any brand new appliances within your investment property. If you built a brand new rental property – and have not used the property for personal use – you can claim depreciation on virtually everything including:
Rental property refrigerator depreciation
Refrigerators depreciate at 10% pa in the Prime Cost schedule or double that (20%pa) in the Diminishing value schedule.
Bar fridges and some smaller refrigerators may cost less than $1,000. In this case, they go into the Low Vale Pool schedule and depreciate at 18.75% pa in the first financial year then 37.5% pa each year thereafter.
For older properties, the dedcutions may not be available to you. But your quantity surveyor will be able to help you there and provide a guaranteed yearly deduction amount before you spenda cent.
Rental property dishwasher depreciation
Dishwashers also depreciate at 10% pa in the Prime cost schedule or 20% pa if your accountant uses the Diminishing value method schedule.
Also; dishwashers that cost equal-to-or-less-than $1,000 fully installed can be claimed at a much higher rate in the low value pooling category.
Rental property oven depreciation
The effecitve life of an oven is 12 years. This is determined by the Australian Taxation Office
Ovens costing more than $1,000 depreciate over a longer period of time to dishwashers. Instead of 20% pa, they depreciate at 16.66%
That’s because the ATO says an oven lasts longer than a dishwasher.
I personally don’t agree, but they are the rules we have to follow as quantity surveyors.
other appliances for depreciation
Additional items also claimable in your depreciation report include…
- Microwave Ovens
- Coffee Makers (built-in)
- Convection Ovens
- Steamer Ovens
- Rangehood Exhausts
- Cooktop Hobs
Should you buy expensive appliances for your investment property?
Generally not. It’s unlikely you’ll generate any more rental income – or better quality tenants – if you pay the extra money for upmarket appliances.
In saying that… some upmarket locations have an expectation that the appliances and general fitout of a property will be in keeping with what the upmarket rental market is expecting.
For example:
Suburbs such as New Farm, Bulimba and Paddington tend to attract tenants with high expectations for the quality of appliances when renting. Partially because their weekly rent payments are so high.
Appliance depreciation is the same regardless of quality.
If a $3,000 oven does the same job as a $1,200 oven – why buy the more expensive option?
Afterall, they’ll both depreciate at the same 16.66% pa.
Further to this
If a $900 oven is as good as a $1,500 oven – I’d personally install the $900 oven as you get faster depreciation. 18.75% in the first year and 37.5% each year thereafter.
That’s much better than 16.66% every year.
A lot of people don’t even use their ovens anymore. That means it’s almost purley aesthetic.
You’d be better off buying another Air Conditioning unit for your tenants than a fancy oven.
Rental property furniture depreciation
Sometimes, appliances are categorised as Rental property furnishings in depreciation scheduels. However, this is confusing and furnishing should really be limited to loose furntuire typically seen in holiday let and air bnb style properties.
Another is commercial rental buildings which often include office furnishings or customer use furniture.
You can read more about claiming furniture and fixtures in my other articles.
Have any Questions?
Simply get in touch with me and I’ll personally address any questions you have.
If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page. But it’s usually best to start at the beginning by visiting our home page
This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying
