Tax Depreciation and Strata Unit Entitlements

Depreciation is the accounting method used for calculating the loss in value of a building over time.

As an investment property owner, you can claim this loss in value as a deduction in your annual tax return. Having a Depreciation Schedule in place is an essential part of any Investment Property strategy.

While it may seem that smaller apartments have less deductions than larger houses, owners of Strata and Survey-Strata lots can also claim Depreciation on their portion of the common areas of the property, which is calculated through Unit Entitlement.

What is Unit Entitlement?

A unit entitlement represents each unit’s value as a percentage of the value of the whole development. It’s used to determine each owner’s share in common property, voting rights, and outgoings.

It is important to note that the unit entitlement is based on market value at inception and not size. For example, if there are two lots in a strata scheme, each worth $500,000, then the unit entitlement for each lot would be 50%. Whereas if one lot is worth $600,000 and the other is worth $400,000, then the unit entitlement of the first lot will be 60% and the second lot will be 40%.

When preparing your Tax Depreciation Schedule, we inspect not only the unit but the common areas, and identify any common property that can be claimed. We then apply the Unit Entitlement to calculate the amount to be claimed in your Tax Return.


Contact Asset Reports today to book a Tax Depreciation Schedule, or ask for a free Estimate of the deductions available to your property.