Can I claim depreciation from previous years?

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First published 9 July 2025

If you forgot to claim depreciation on your rental property or didn’t realise you were entitled to it, you’re not alone. Many Australian property investors assume it’s too late to recover missed deductions once the financial year has ended – but that’s not the case.

Unclaimed depreciation can cost investors thousands of dollars in lost tax benefits. Fortunately, there is a way to fix this: a process known as back-claiming.

In this article we explore back-claiming, the common misconceptions holding investors back and answer the question, ‘can I claim depreciation from previous years?’

What is back-claiming?

Back-claiming is the process of amending a past tax return to include deductions or entitlements that were missed the first time. The Australian Taxation Office (ATO) allows individual taxpayers to amend their tax returns, generally within two years of the original notice of assessment. However, this period may be extended in certain circumstances where a valid reason exists. If approved, these amendments can result in a refund and improved cash flow.

Can I claim depreciation from previous years?

Yes, you can. If you missed claiming depreciation on your investment property, you may be able to amend your past tax returns and recover the deductions.

Depreciation refers to the decline in value of an income-producing property’s structure and fittings over time. Investors can claim deductions under two categories:

  • Capital works (Division 43): Includes permanent structures such as walls, floors, roofing, and fixed cabinetry.
  • Plant and equipment (Division 40): Covers removable or mechanical assets such as carpets, blinds, air conditioners and appliances.

A depreciation schedule can be prepared at any time and backdated to the date of settlement, enabling accurate back-claims.

How to claim missed depreciation on a rental property

To claim missed depreciation on a rental property, follow these steps:

  • Engage a quantity surveyor, like BMT to prepare a tax depreciation schedule
  • Your accountant uses the report to amend prior tax returns within the ATO’s timeframe
  • Receive any refund for overpaid tax based on previously unclaimed deductions

Bonus tip: The cost of preparing a depreciation schedule is 100% tax deductible in the financial year it is purchased.

A depreciation schedule remains valid for the life of the property and can also be updated as renovations or new assets are added.

Case study: How one investor recovered $9,800 in missed deductions

Investor profile

  • Name: Sarah
  • Property type: 1980s brick duplex in Newcastle, NSW
  • Settlement date: July 2022
  • Annual rental income: $24,000
  • Depreciation schedule ordered: March 2025

The situation

Sarah purchased an investment property in 2022 but didn’t realise she could claim depreciation. She had assumed there were few deductions available due to the property’s age and previous ownership. As a result, no depreciation was claimed in her 2022–23 and 2023–24 tax returns.

What changed

After learning about back-claiming, Sarah contacted BMT Tax Depreciation. A detailed site inspection revealed that, while plant and equipment depreciation wasn’t available due to 2017 tax reforms, substantial capital works deductions were still claimable. Renovations completed by the previous owner were extensive and of a high quality including new roof, deck with pergola, tiled floors, kitchen and bathrooms, which significantly increased the deductible amount.

The outcome

BMT prepared a schedule that:

  • Backdated deductions to her settlement date
  • Identified $9,800 in missed depreciation across two financial years
  • Enabled her accountant to amend previous tax returns

Sarah received a tax refund of $3,185 and now claims around $4,900 annually in ongoing depreciation.

Special scenarios: EOFY, partial year & renovations

EOFY timing

Many investors believe they must order a depreciation schedule before 30 June to claim deductions. This is a myth. Schedules can be prepared anytime and still apply to previous financial years, as long as the property was available for rent during that period.

Partial-year claims

If your investment property was only rented out or available for lease for part of the year - due to settlement, vacancy, or renovations - you can still claim depreciation on a pro-rata basis. A good schedule will calculate these entitlements accurately.

Renovations (including those by a previous owner)

Renovations such as kitchen upgrades, new bathrooms or extensions – whether completed by you or a prior owner – can qualify as capital works deductions. Additionally, plant and equipment assets installed by the current owner will also qualify for deductions. These can be included in your schedule and claimed if they fall within the ATO’s depreciation eligibility guidelines.

Misconceptions holding investors back

Many investors miss out on deductions because of outdated or incorrect beliefs. Here are some of the most common:

‘You can’t claim depreciation after EOFY.’

False. You can back-claim as long as it’s within the ATO’s amendment window.

‘You need to have ordered the schedule before 30 June.’

Incorrect. The timing of the schedule doesn’t affect the claimable period.

‘Depreciation can’t be claimed unless the property is tenanted.’

Not true. If the property was available for rent, you can claim depreciation.

‘You can’t claim depreciation on older or second-hand properties.’

This is a widespread myth. While 2017 legislation changes restrict some plant and equipment deductions for second-hand properties, capital works deductions remain fully claimable, and new assets installed after settlement are still eligible.

These misconceptions often result in missed refunds. A professional schedule can reveal just how much you’re entitled to.

How BMT can help you recover missed depreciation

BMT Tax Depreciation has helped thousands of investors recover missed deductions by preparing accurate, ATO-compliant depreciation schedules. With nearly one million reports completed, BMT is trusted by property professionals across Australia.

BMT services include:

  • Comprehensive property inspections by BMT depreciation specialists
  • Schedules that start from the settlement date – even for past years
  • Calculations of capital works and eligible plant and equipment
  • Updates for renovations and upgrades completed by current and previous owners
  • Accurate pro-rata calculations from when rental first commenced
  • All documentation required to support amended tax returns

Did you know?

Data collected from close to one million depreciation schedules completed by BMT Tax Depreciation reveals that 66% of properties have been renovated, extended or upgraded.

Our team works with your accountant to make the back-claiming process seamless and stress-free.

The bottom line

If you’ve been wondering, “Can I claim depreciation from previous years?”, the answer is yes. Even if you forgot to claim depreciation on your rental property or didn’t know you were eligible, it’s not too late to act.

With a qualified quantity surveyor and your accountant’s support, you can:

  • Back-claim missed depreciation
  • Amend past tax returns within ATO time limits
  • Reduce your taxable income, and
  • Boost your investment property’s cash flow

Contact BMT Tax Depreciation today on 1300 728 726 or Request a Quote online and reclaim the deductions you’re entitled to.

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