Depreciation Schedules: How Geelong Investors Can Maximise Tax on Investment Property

Geelong's rental market remains a drawcard for investors seeking yield above Melbourne's tightening returns. With median rents in established suburbs like Bellerine and South Geelong hovering around $480–$520 per week, net yields of 4–5% are still achievable. But to maximise returns, investors increasingly rely on depreciation schedules—a tax strategy that may be less generous than it once was.

Depreciation allows investors to claim the declining value of building structures and chattels (fixtures and fittings) on their tax return, reducing taxable income even though no cash has left their pocket. For a $650,000 investment property in Newtown or Manifold Heights—typical entry points for Geelong investors—this can mean annual claims of $8,000–$12,000, depending on the building's age and specification.

The catch: the Australian Taxation Office has tightened rules significantly. As of 2017, investors can no longer claim depreciation on plant and equipment in residential buildings acquired after that date. For older properties—common in Geelong's established pockets—the window to claim on items like carpets, kitchens, and bathrooms is closing as buildings age. The building structure itself still depreciates at roughly 2.5% annually, but the low-hanging fruit has largely gone.

"Investors buying in growth corridors like Armstrong Creek or Bellarine get the benefit of new-build depreciation schedules," says one local buyer advocate. "But if you're buying a 1990s weatherboard in Bellerine for $580,000, you'll want a quantity surveyor's report before settlement—ideally under $800, versus the tax upside."

The strategy remains sound, particularly for investors holding property long-term. A depreciation schedule, prepared by a quantity surveyor, itemises every depreciable element: concrete pathways, fencing around parks like Eastern Beach Reserve access, internal walls, and fixtures. It's not passive income, but it is tax-deductible income reduction.

However, timing and property age matter enormously. Properties built before 2000 in suburbs like Manifold Heights and East Geelong offer stronger depreciation claims than newly-built units. Conversely, the ATO's focus on residential investor compliance means claims are now scrutinised more closely.

For Geelong investors navigating tighter yields and elevated construction costs, depreciation schedules remain a legitimate lever. But they're no longer a shortcut—they're a component of disciplined tax planning. Consult a quantity surveyor and accountant before purchase, not after.

This article was compiled by AI from the sources linked above and screened before publishing. See our editorial standards.