Property Renovation and Depreciation Deductions

Australian investors give more preference to renovate their property before leasing them out. There is a risk while renovating the property about spending thousands of dollars in property depreciation deductions.

Interest is the first and then Property depreciation is generally the second biggest tax deduction, though it’s often missed by investors. This is because it’s a considered as a non-cash deduction, meaning you don’t have to spend money to be eligible to claim it.

The Australian Taxation Office allows owners of income-producing properties to claim depreciation deductions for whatever spending on assets that time. You can claim depreciation via building structure and capital works deduction.

For more information on online tax return 2020, Tax Return 2020, myGov 2020, myTax 2020 or any other tax related matter, please call our professional accountant on 1300 768 284 or you can email us at

Renovating Properties and Its Effect in Tax Return

If you’re considered a individual property investor, your net gain or loss from the renovation (proceeds from the sale of the property less the purchase and other costs connected with buying, renovating and selling it) is treated as a capital gain or capital loss respectively.

CGT concessions such as the CGT discount and the main residence exemption may reduce your capital gain.

You’re not conducting an enterprise of property renovation for GST purposes and are not required to register for GST, but if you’re registered in some other business ability you don’t pay GST on the proceeds from the sale of the property or claim GST credits for connected purchases.

If you’re renovating one or more properties you need to work out if you are a personal property investor, engaged in a profit-making activity of property renovations, or carrying on a business of renovating properties.

If you build new residential premises for sale, you’re liable for GST on the sale, and you can generally claim GST credits for your construction costs and purchases related to the sale.

Profit-making activity of property renovations

If you’re carrying out a profit-making activity of property renovations, you report in your income tax return your net profit or loss from the renovation (proceeds from the sale of the property less the purchase and other costs associated with buying, holding, renovating and selling it).

You’re allowed to an Australian business number (ABN) and you may be required to record for GST if the renovations are significant.

For more information on Etax, myTax ATO and online tax return, please contact us at 1300768284 or you can email us at