Tax depreciation on a residential or commercial investment property is a deduction against assessable income allowing the owner to reduce the amount of taxation payable. Deductions are calculated based on opening or residual value of an asset, and depreciated through effective lives and depreciation rules as prescribed by the Australian Tax Office (ATO).

As an investor, you are able to claim for two distinct types of depreciation on buildings - Capital Allowance (Division 43) and Plant & Equipment (Division 40).

• Capital Allowance deductions are based on the historical construction costs of the property which may include surveying, engineering, architectural and building fees. For residential properties to claim these, the property has to be built after the 15th of September 1987. The rate of depreciation is fixed over either 25 or 40 years (determined by criteria set by ATO legislation). Typical Division 43 components are driveways, the building structure itself, concrete, carports and most other capital improvements.

• Plant & Equipment asset items are depreciated at a higher rate than the building. Assets included in this class are predefined by ATO legislation with the rate of depreciation determined by the Commissioner of Taxation. Typical plant and equipment items are air conditioners, blinds, carpets, curtains, door closers, hot water systems, ovens, range hoods and many other items. You can find an up-to-date list of the effective lives of Plant & Equipment assets on our website here.

The best way is to have a quantity surveyor inspect the property and prepare a depreciation schedule. In the overwhelming majority of cases, a physical site inspection is required to ensure you are claiming absolutely everything possible. This is something our competitors often skip over to offer a lower upfront cost, but you end up paying for year after year at tax time.

MCG makes the process easy with our site planning team who can work directly with property managers, landlords, or tenants to find the least disruptive time for us to inspect. Our experienced site inspectors can complete residential inspections in 45 minutes or less, and from there our production team will have your report completed and in your inbox in 7 to 10 business days.

As Quantity Surveyors qualified with the Australian Institute of Quantity Surveyors, MCG is uniquely positioned to provide superior tax depreciation schedules. We understand what is required to get the best result for our clients, and this expertise is encoded in our policies such as a physical site inspection for every report, flexible invoicing around tax time, and complementary report amendments for minor works to your property. This gives us an unparalleled ability to maximise your deductions with the least possible hassle.

We are also experts in insurance valuations, so we can complete a valuation report (called an Insurance Replacement Cost Plan) for your property at a significantly discounted rate on the back of a depreciation schedule. We offer additional reports for council development applications if you are looking to build.

MCG is trusted by industry names such as Stockland, McDonalds and Steadfast for our consistently excellent service. We are excited to offer the same value and experience to The Agency clients through our partnership.