Property depreciation is a non-cash tax deduction, meaning owners do not need to spend money to be eligible to claim depreciation. Depreciation deductions apply to all income producing properties in two ways. Deductions can be claimed for the depreciation of the building structure via a capital works deduction and for the plant and equipment assets contained within the property.

Investors often wonder about the potential gains from claiming depreciation on older properties compared to new properties. The simple answer is that the owners of new properties will receive higher depreciation deductions as they contain newer fixtures and fittings. However, all investment properties both new and old can attract substantial depreciation deductions.

The table below shows the difference a depreciation claim can make for the owners of new, old and recently constructed residential house.

As shown above, although the owner of a newer residential property constructed after 2012 will receive much higher depreciation deductions, the owner of an older property constructed in 1980 will still receive considerable deductions.