EOFY 2026. As the end of the financial year approaches, property investors have a narrow window to get their tax position right.
In 2026, the ATO is applying increased scrutiny through data matching across lenders, property managers, and short term rental platforms. This means missed deductions and incorrect claims are more likely to be picked up than ever before.
For investors, this is not just about compliance. It is about cash flow.
Every legitimate deduction you claim reduces your taxable income and improves your overall return. Yet many investors still miss one of the most powerful and underutilised tools available to them: tax depreciation.
What is Tax Depreciation and Why Does It Matter?
Tax depreciation allows you to claim a deduction for the decline in value of your investment property and its assets over time.
This is a non-cash deduction, which means you can reduce your taxable income without affecting your actual cash flow.
There are two key components:
Capital Works
This covers the building structure, including walls, roofs, and fixed elements. Most residential properties are claimed at 2.5 percent per year, while eligible Build-to-Rent projects may qualify for a 4 percent rate.
Plant and Equipment
These are removable or mechanical assets such as carpets, blinds, appliances, and air conditioning units, which are depreciated over their effective life.
For the 2025–26 financial year, having a professionally prepared Tax Depreciation Schedule is essential. The ATO recognises qualified quantity surveyors as the appropriate professionals to estimate construction costs and depreciation values.
Who Should Review This Before EOFY?
If you own an investment property, reviewing your depreciation position before 30 June can make a meaningful difference to your tax outcome.
Build-to-Rent (BTR) Investors
Projects that commenced construction after May 2023 may be eligible for the accelerated 4 percent capital works deduction, significantly increasing annual claims.
Renovators
Upgrades such as kitchens, bathrooms, or flooring can unlock new depreciation deductions. If structured correctly, these can be claimed over time or partially written off.
Commercial and Small Business Owners
Eligible businesses may be able to utilise the $20,000 instant asset write-off for assets that are installed and ready for use by 30 June 2026. This is subject to eligibility and business use requirements.
Indicative First-Year Deduction Potential
Based on current ATO rates and typical market values, investors may see the following approximate first-year deductions:
| Property Type | Potential First-Year Deduction |
| New Apartment | $15,000 – $20,000 |
| New House | $12,000 – $15,000 |
| New Commercial Building | $25,000 – $40,000 |
| Older Residential (Renovated) | $3,000 – $7,000 |
Actual outcomes will vary depending on the property, construction cost, and asset profile.
Key 2026 Compliance Strategies
Holiday Home and Private Use Rules
Under draft guidance such as TR 2025/D1, the ATO is focusing more heavily on whether a property is genuinely available for rent.
To claim full deductions, you must demonstrate that the property is marketed at market rates and not primarily used for personal purposes.
Repairs vs Improvements
Repairs that fix existing damage are immediately deductible. Improvements that upgrade or replace assets must be claimed over time as capital works or depreciation.
The Scrapping Opportunity
If you renovate, you may be able to claim the remaining value of removed assets as an immediate deduction. This must be assessed before demolition.
Interest Apportionment
Only the portion of loan interest used for the investment is deductible. Any personal use, including redraws, must be separated and excluded.
Investor Action Checklist
- Review your properties for an up-to-date depreciation schedule
- Identify any assets removed or replaced during the year
- Complete and pay for outstanding repairs before 30 June
- Keep clear records of private use versus rental availability
Final Word
EOFY is not just about lodging your return. It is your opportunity to optimise your position before it is locked in.
Most investors are not under-claiming because they are being conservative. They are under-claiming because they are missing what is available to them.
Need Help Before 30 June?
If you are unsure whether you are claiming everything correctly or want to maximise your deductions before EOFY, now is the time to review it.
At Simply Wealth, we help property investors:
- maximise depreciation and deductions
- structure their loans correctly
- avoid common ATO issues
Speak with our team today.
Call 1300 074 675
WhatsApp 0482 088 637
marketing@simplywealthgroup.com.au
