A simple explanation of common property depreciation

A simple explanation of common property depreciation 1 (1)

Property rental rates and values are subject to constant change, and this is particularly evident for units, townhouses and other types of strata complexes.

A constant amongst this sea of change is the tax deductions that rental properties provide to their investor owners. An additional benefit of investment properties is the lucrative common property depreciation deductions strata investors can claim.


What is common property?

When you own a property that’s part of a strata title, such as a townhouse or unit development, strata fees are unavoidable.

These fees cover a variety of things depending what type of building you own. This can include insurances, maintenance, council rates and shared facilities maintained and funded by the body corporate. As an investor, you can claim these strata fees as a tax deduction.

Another important consideration is the depreciation you can claim. You can claim the depreciation for the actual property you own and you are also eligible to claim a partial deduction on the common property assets. These are some common property depreciation deductions:

  • elevators
  • alarms
  • garage doors
  • fire safety equipment
  • security systems
  • common area flooring (e.g. hallway carpet)


How does this common property depreciation work?

Common depreciation deductions are subjected to pro-rata measures. They are established from your total ownership percentage of the strata.

For example, if your ownership percentage is calculated as 10 per cent and the security cameras hold a depreciable value of $10,000 the value your depreciation deductions for the year would be $1,000.


How to claim common property deductions

The most accurate way to claim common property depreciation is with a tax depreciation schedule prepared by a specialist quantity surveyor (someone like BMT).

Contact Link Advisors to find out if you should be claiming strata fees or common property depreciation deductions each year.