Depreciation on new house build

Brand New Houses offer the most tax deductions possible – if you have a good Quantity Surveyor

New Build House Depreciation

Planning on building a brand new rental investment property – or just bought one off the builder?

You can claim significant tax deductions on your new property. All you need is a qualified Quantity Surveyor to assess it for you.

New Home Depreciation

When you have a new build – that you’ve never used as a principal place of residence – you are eligible to take advantage of all categories of tax depreciation. The ATO has separate rules for Residential investment properties with brand new builds getting preferential treatment.

For you, that means big tax deductions from day one.

In fact, many items will get instant 100% depreciation in the first financial year!

New homes are unique in this way. Even a 1yr old house does not get the same preferential treatment.

That’s because in 2017 the ATO clamped down on what ‘other than brand new’ residential properties could claim as deductions.

What can a new build claim in depreciation?

You can claim everything – other than plants, turf and mulch.

The ATO says because plants and turf grow, that makes them an asset that appreciates in value rather than depreciate.
However, should they die you can replace them and claim the costs as repairs and maintenance items – claimable at 100% instant asset write off.

But to expand on my answer; you can claim yearly tax deductions for the building and outbuildings like carports and sheds. You can also claim hard landscaping like driveways, fencing, swimming pools and retaining walls. These are known. As capital works items (division 43)

You can also claim the lose items like;

  • Carpet
  • Appliances
  • Light fittings
  • Hot water units
  • Air conditioners

And many more.

These are known as ‘Plant and Equipment’ items and fall under division 40 within the ATO taxation laws.

For a more comprehensive guide on the differences between division 40 and Division 43 check out this article I wrote.

When should you get your depreciation schedule?

As soon as you can.

I say that because the ATO does have a ‘sunset’ clause so-to-speak on how many years you can backdate your depreciation report.
Typically you can backdate the report 2 years, but there’s variables to this.
So ideally, you should arrange for your property to be inspected ASAP.

Why should you get a depreciation report today

To pay less tax.
By using a high quality depreciation schedule your accountant will be able to claim more tax deductions in your annual return.
This will mean less tax to pay. Or even a nice tax refund.

Who should you choose as your quantity surveyor?

The best quantity surveyor you can afford.

There’s at least 140 companies providing tax depreciation schedules in Australia now.
Some are fantastic value for money. Some are overpriced. And some are a total waste of money.

Just like when choosing the right accountant

So do your research and choose a qualified quantity surveyor who really knows investment property deductions.

Tip: make sure they send a qualified quantity surveyor to your house to do a physical inspection.
Many send an unqualified tick-sheet guy.
Some don’t send anyone at all!

Have any Questions?

Simply get in touch with me here 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 here>

This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying

Published February 2023