Rental properties and second-hand depreciating assets

Be aware of the tax rules surrounding ‘second-hand depreciating assets’

The ATO is reminding taxpayers that have a residential rental property, to take care when making claims for second-hand depreciating assets used in their properties.

In most cases, these are items that existed in the taxpayer’s property when they purchased it, or were in their private residence (which they later rented out), such as:

  • flooring and window coverings;
  • air conditioners, washing machines, alarm systems, spas, pool pumps; and
  • items used for both the rental property and the taxpayer’s own home.

Since 1 July 2017, taxpayers generally cannot claim the decline in value of second-hand depreciating assets (some limited exceptions do apply).

However, this rule does not apply to a property that was rented out before this date, or if it is newly built or substantially renovated (conditions apply).

If you have a residential rental property, to help us get your claim right, please answer the following:

  • When did you purchase the property?
  • Was it a new or existing build?
  • Did you live in the property before renting it out?
  • When did you start renting the property?
  • Was the asset already in the rental property when you bought it?
  • Is the property used for business purposes?
Related reading

Rental property income and deductions focus