Property Depreciation: Boost Cash Flow with a QS Report

🏡 Why Depreciation is the Most Overlooked Tool in Property Investing

Many property investors focus on growth, strategy, and acquisition but forget one of the most impactful tools for holding and compounding wealth: depreciation

In this episode of The Property Nerds podcast, InvestorKit’s Founder Arjun Paliwal sits down with Tuan Dong from Duo Tax Quantity Surveyors to unpack what depreciation is, how it works, and why smart investors are using it to improve cash flow, offset tax, and protect their portfolios in today’s interest rate environment

What Is Depreciation and Why Does It Matter?

Depreciation is the wear and tear on a building and its fixtures over time and in property investment, it becomes a non-cash tax deduction that increases your cash flow without needing to spend extra

Tuan explains:

“It’s essentially free cash flow. You don’t physically pay for it, but you can claim it — boosting your holding power”

This deduction includes both: Capital works (Division 43): walls, floors, roof, slab Plant & equipment (Division 40): ovens, carpets, blinds, air conditioners

Residential vs Commercial Property Depreciation

One of the biggest tax planning differences is between residential and commercial properties

Since May 2017, secondhand residential properties can no longer claim plant & equipment depreciation. But in commercial settings, even secondhand plant & equipment can still be depreciated

This means commercial properties can yield significantly larger tax deductions, especially in positively geared scenarios where depreciation helps reduce your tax bill

Renovations, Scrap Value and Missed Opportunities

Tuan breaks down how many investors miss thousands in cash flow by failing to

• Get a schedule before renovating to claim scrap value

• Understand that post-renovation assets are depreciable, even on older homes

• Realise that even if your property is old, data and photos can still help quantify depreciation potential

“Scrapping $15,000 worth of old fixtures before a renovation could give you immediate deductions just from timing it right”

The Process From Property to 40-Year Schedule

1. Send your property details (address, settlement date)

2. Duo Tax assesses it via RP Data and renovation history

3. If worthwhile, an inspection is arranged

4. You receive a 40-year depreciation schedule, used in your tax returns every year

“For $600, you could unlock $10,000+ in deductions over a few years even more on the full schedule”

Depreciation and Capital Gains What to Know Before Selling

Claiming depreciation now can affect your capital gains tax calculation later. When you sell, the ATO adjusts for any depreciation claimed so it’s not “free money” but rather a front-loaded tax benefit

However, with the CGT discount typically 50 percent for personal owners most investors still come out ahead

🛠 Checklist Should You Get a Depreciation Report?

✅ The property was built after 1987

✅ You’ve done renovations even cosmetic

✅ It’s a commercial property

✅ It’s an older property with updates

✅ You want to offset rental income

✅ You’ve never claimed before

💬 Final Thought

Depreciation isn’t a strategy. It’s the fuel that powers your ability to keep going. Holding power is everything in property, and this tool can help you hold longer, grow faster, and invest smarter

🎧 Watch the Full Episode

Want to dive deeper into how depreciation can unlock cash flow and investment performance?

▶️ Watch the full conversation with Tuan Dong from Duo Tax on YouTube: https://www.youtube.com/watch?v=tWdrZaUGoqE&t