Updated: April 2023
Carpet Depreciation
9 out of 10 homes I inspect have carpet in the bedrooms. So it’s a common tax depreciation item found in tax depreciation schedules
Here’s how you can claim depreciation on your carpet
Firstly;
Depending on the value of your carpet it will fall into either the Low Value Pool category or the Prime Cost/Diminishing Value Method category.
Under $1,000 and it’s the Low Value Pooling for you.
Claimable at 18.75% pa in the 1st financial year and 37.5% pa each year thereafter.
If over $1,000 it’s the Diminishing Value method for you.
Here you claim the carpet at 25% pa.
Note; properties available for rent prior to 1 July 2019 will have their existing carpets claimed at 20% pa until they are replaced with new carpet. Then the new carpet can be claimed at 25% pa.
That’s because on 1 July 2019 the ATO decided to shorten the effective life of carpet from 10-years down to 8.
That’s good news for property investors as it means bigger deductions sooner.
Outdoors Carpets:
If you’ve got some outdoors carpets you can actually claim these at 40% pa.
That’s because the ATO says external use carpet has a very short life.
Best Carpet Cleaning Methods for Rental Properties
The most common methods for cleaning carpets in an investment propery are as follows:
Hot Water Extraction (Steam Cleaning):
Pros – Most effective way to remove dirt and debris, can help remove stains, and leaves carpets with a fresh smell.
Cons – Can take a long time to dry and can damage carpets if done incorrectly.
Dry Cleaning:
Pros – Very quick drying time and doesn’t require much water.
Cons – Not as effective as hot water extraction and can leave a residue.
Bonnet Cleaning:
Pros – Very effective at removing surface dirt and great for high traffic areas.
Cons – Can cause damage to carpets if done incorrectly and does not deep clean carpets.
Shampooing:
Pros – Very good for deep cleaning carpets and can help remove stains.
Cons – Can be time consuming and takes a long time to dry.
Replacing Rental Property Carpet:
If you find yourself having to replace some carpets due to deterioration or damage you can typically claim the leftover value (residual value) as a scrapping value and claim it as a 100% instant asset write-off in the financial year you scrap it.
Also;
If you replace carpets one room at a time (rather than the entire house in one go) you can usually claim each room’s new carpet as repairs and maintenance work at 100% write-off.
Meaning not only can you claim the lump sun deductions for the old scrapped carpet but also a lump sum tax deduction for the brand new carpet.
This may sound a little confusing at first but I know exactly how to handle your deductions to ensure maximum tax benefit for you.
To find out more or to get your free quote, simply get in touch with us here and we will get back to you within 24-hrs (usually within 2-hrs)
Want to see some real world results
The best place to see what other investors are getting in tax depreciation deductions for properties similar to yours is by visiting our client portfolio page here
For further reading on more of our quantity surveyor articles click here
Or to visit our home page for Brisbane tax depreciation services click here
This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying
