Can I use the previous owner's depreciation schedule?

When you buy an established rental property, the seller or their agent sometimes passes on the depreciation schedule the previous owner used. It is useful evidence, but it cannot simply be reused: some of it follows the building to you, and some of it was the previous owner's alone.

Division 43 capital works deductions are worked out from what it cost to construct the building, not from what anyone paid for it. That cost does not change when the property is sold, so a previous owner's schedule is often the best record of it, alongside the original building contract. Renovations the previous owner carried out, such as a new kitchen or bathroom, are capital works too, and the years left on them pass to you; what a later renovation does to them when it pulls one out has a guide of its own.

Where neither the schedule nor a contract gives the cost, it is estimated from the floor area, construction and finish at the rates of the year and state it was built in, as our pages price a house in the Northern Territory or a townhouse in Victoria for each year built.

What does change is the timing. Your deductions start when the property is first available for rent after your settlement, and they run for what is left of the 40 years from each part's completion: a building or renovation begun after 15 September 1987, or a structural improvement such as a driveway or fence begun after 26 February 1992. Work begun earlier has run out or was never deductible. Even on a property built before 1987, a renovation begun after 15 September 1987 has years of its own. Taking a building as finished on 30 June of the year it was built, as our year pages do, one built in 1999 has 13 income years left from 2026–27, the last 2038–39, and one built in 2005 has 19, whoever claimed the years before. A schedule prepared for someone else's dates has to be recalculated for yours.

The plant in the old schedule (carpet, blinds, hot water, appliances, air conditioning) was valued at what it cost the previous owner. Your cost is different: it is the share of your purchase price that relates to each item, at its age and condition when you bought it.

And for most buyers of a second-hand residential property since 9 May 2017, the decline in value of that previously used plant is not deductible at all (section 40-27 of the Income Tax Assessment Act 1997). Its value is still worth recording, because when an item is sold or scrapped the decline that could not be claimed can make a capital gain or loss. New plant you buy for the property while it is let is deductible.

Upload the previous owner's schedule with your contract and the other documents that help. We take its construction costs and dates for the building and any renovations, recalculate them for your dates, and value the plant afresh at your acquisition. Every figure in your report says where it came from.