New data shows depreciation remains a major deduction for residential property investors

ATO statistics released in June 2026 show claiming depreciation should remain a priority for investors. Of the deductions published, depreciation was the second-largest deduction after interest, highlighting the need to check whether records support an accurate, maximised and compliant claim.

Depreciation allows investors to claim the decline in value of a property's structure and qualifying assets over time. Unlike out-of-pocket costs such as interest repayments and management fees, it is a non-cash deduction that can reduce taxable income without adding another direct cash outlay.

According to the latest ATO data, the average plant and equipment deduction was $1,189, while the average capital works deduction was $2,769 for residential investment properties. This brought the average residential property depreciation claim to $3,957 in FY 2023-24.

These figures show depreciation remains a valuable deduction, and they also highlight why investors should check whether their claim is reaching its full potential. By comparison, BMT Tax Depreciation schedules produced an average claim of $6,696 in FY 2023-24, approximately 70 per cent higher than the ATO average property depreciation claim. More recently, BMT's residential investment property clients claimed an average of more than $12,000 in first full financial-year depreciation deductions in FY 2025-26.

Table 1: BMT client average first full financial-year depreciation claim, FY 2025-26

*Calculated using the diminishing value method.

The ATO figures also provide useful context across other common rental property deductions. In 2023-24, the average interest on loans claim was $13,314. The average body corporate fee claim was $3,156, the average property management fee claim was $1,603 and the average repairs and maintenance claim was $1,276. These costs are usually easier for investors to identify because they are supported by loan statements, invoices or payment records.

Depreciation can be harder to identify without a detailed review of the property itself. Renovation history, building age, construction type, asset quality and condition can all affect the final calculation. BMT s specialist site inspections help identify eligible plant and equipment assets, capital works and improvements. These details can reduce the risk of missed deductions and support a more complete depreciation schedule as physical site inspections help identify details that may not appear in property records or sales documentation.

Capital works generally relate to the building and fixed improvements, including structural elements and fixed assets. These deductions are often claimed over many years, which means previous works often completed by former owners will still support current and future deductions. Plant and equipment covers eligible assets that are generally removable or mechanical in nature, such as floor coverings and ceiling fans. The 2017 budget amendments for second-hand residential property can limit some plant and equipment claims, but investors who buy and install new assets will still have depreciation deductions available.

Tax planning may also require more attention in the coming years. Under the 2026-27 Federal Budget reforms, negative gearing and capital gains tax rules will change for established properties from 1 July 2027.

A current BMT Tax Depreciation Schedule helps identify eligible deductions, calculate claimable amounts and document the basis for those figures. It can also give an accountant clearer information to work with, especially where a property has been renovated, improved or had assets replaced.

Arranging a BMT Tax Depreciation Schedule can help confirm whether all available deductions have been identified and give investors stronger records before lodging their return. To get started, call BMT on 1300 728 726 or Request a Quote today.