Depreciation scrapping: the deduction most owners miss during a renovation
Improve the performance of the property you own.
Best for: Owners planning a renovation of a rental property
When assets are removed during a renovation, such as an old kitchen, carpet, hot water system, or air conditioning unit, there is often remaining depreciable value left on those assets. This can potentially be claimed as a deduction in the year of removal, but only if it's identified before demolition, not after.
Why this matters
When assets are removed during a renovation — an old kitchen, carpet, hot water system, air conditioning — there can be remaining depreciable value to claim in the year of removal. It is best reviewed before demolition, because once assets are removed it can be much harder to identify and evidence what was there.
What to check
- What is being removed or replaced in the renovation
- Whether those assets still have written-down value on your depreciation schedule
- Whether the items are Division 40 depreciating assets or Division 43 capital worksThe treatment can differ between the two — your quantity surveyor will classify them.
- Whether second-hand residential asset restrictions affect any Division 40 claimsRules changed in 2017 for previously used assets in residential property.
- Timing: have the position reviewed before works begin where possible
Who can help
Quantity surveyor
A pre-renovation scrapping assessment against your depreciation schedule.
TAKE ACTION · DOCUMENT REQUEST
One email before works begin
Request a scrapping assessment
Copy this request and send it to your quantity surveyor before works begin.
WHAT YOU'LL NEED
- Your current depreciation schedule
- A list or photos of what's being removed
USE AI TO HELP
Use AI to document what's being removed and brief your accountant and quantity surveyor before demolition.
Best prompt for this issue
I'm renovating an investment property. Using the list of assets being removed, help me create a documentation pack: what each item is, its location, approximate age, and photos to take before demolition. Then prepare a concise brief for my accountant and quantity surveyor. Do not attempt to determine what is claimable.
Quick modes
WHAT TO PROVIDE
- current depreciation schedule
- list of what's being removed
- renovation scope or quotes
ASK AI TO GIVE YOU
- a short summary of the situation
- the main issue
- missing information
- risks to investigate
- questions to ask
- the next three actions
Privacy: do not paste passwords, tax file numbers, bank account details or other sensitive personal information into an AI tool. If a document contains personal details it doesn't need, redact them before uploading.
What happens next
If there is remaining claimable value, it should be documented before the assets are removed — photographs, the existing schedule, and your QS's assessment are the evidence. After demolition it becomes much harder to substantiate what was there.
Important considerations
- The treatment differs between Division 40 depreciating assets and Division 43 capital works, and second-hand residential asset restrictions can limit Division 40 claims.
- This is general information, not personal tax advice. Your accountant and quantity surveyor determine what's claimable in your situation.
THE HOLD QUESTION
Before you renovate, has anyone checked what you're about to throw away on paper as well as in person?
NOT SURE WHAT TO ASK AI?
Ask a Better Property Question
Most people don't need more AI — they need to ask AI better questions. Type your question (or skip it) and copy a prompt that makes any AI tool ask you the right things first.
I am trying to understand this property issue. Before answering, identify any important information that is missing. Ask me only the questions that materially affect the answer. Once I respond, explain the issue in plain English, separate facts from assumptions, identify the main risks and give me the next three actions. Flag anything that should be confirmed with a qualified professional.
Privacy: do not paste passwords, tax file numbers, bank account details or other sensitive personal information into an AI tool. If a document contains personal details it doesn't need, redact them before uploading. This is a way to prepare — not financial, tax or legal advice.
Not sure what else to review?
Run the Annual HOLD CheckRelated HOLD Tips
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