Granny Flat Depreciation Schedule Australia: What to Check

A granny flat depreciation schedule in Australia records potential deductions for eligible capital works and depreciating assets. It does not guarantee a refund or a fixed annual deduction. The claim depends on the costs, assets, dates, ownership and income-producing use of the property.

By The Granny Flat Guide Team. Updated 2 October 2026. About our research.

Correction: earlier wording promised deduction ranges and refunds, restricted cost estimates to quantity surveyors alone, and overstated CGT outcomes. Those claims have been removed.

What information belongs in a depreciation schedule?

Start with the construction contract, variations, final invoices and the completion date. Keep separate records for appliances and other assets, including purchase and installation dates. Give the preparer the actual figures you have instead of assuming that a building’s current value is its construction cost.

The ATO’s guidance on rental expenses claimed over time addresses capital works and depreciating assets. If construction costs are unavailable, it describes obtaining an estimate from an appropriately qualified person. A quantity surveyor is one possible source; it is incorrect to say only a quantity surveyor can ever estimate the costs.

Ask your tax agent which records are sufficient and where an estimate is needed before commissioning a report. If the granny flat shares services or expenses with the main house, flag that arrangement rather than letting the preparer assume a wholly separate rental property.

Keep capital works and individual assets separate

Building work and removable assets do not necessarily receive the same tax treatment. A schedule should explain the categories and the basis used for each amount. Don’t apply one advertised percentage to the entire project invoice, which may also include land-related spending, services or other costs requiring separate treatment.

Ask the preparer to identify any estimates, the documents relied on and how items supplied within a combined building contract were allocated. Check that appliances or fit-out items have not been counted twice, once in the building total and again as separately purchased assets.

Keep replacement records after handover. If you replace an appliance, pass the invoice and dates to your tax agent rather than continuing to use the original schedule without review. A report is a record to maintain, not a substitute for checking what actually happened during the year.

A deduction is not a dollar-for-dollar refund

Do not put the face value of a deduction into your cash-flow spreadsheet as cash received. Your tax agent needs to work out the effect on your return. The result depends on your wider tax position, and a schedule on its own cannot promise money back into your bank account.

Keep the construction decision separate from the tax calculation. A deduction does not remove the need to fund loan repayments, repairs, insurance or periods without rent. Use the cost breakdown guide to establish actual spending and discuss the tax treatment of those records afterwards.

Be cautious with marketing examples that describe a “typical” refund without listing the assumptions. Ask which costs, use dates and taxpayer circumstances produced the example, and whether any of them match your proposed project. If they don’t, leave that figure out of your budget.

Tell your adviser how the dwelling is used

Document commercial rent, family occupation, private use and any changes between them. Give your tax agent the lease dates and details of shared costs. A granny flat occupied by a relative under an informal arrangement should not automatically be treated like a property rented at market rates.

The ATO’s rental property guide explains that expenses differ in deductibility and timing, and that apportionment can be needed. Ask your adviser how to record mixed use before lodging a return.

For lifetime family accommodation, also read our granny flat agreement explainer. The legal arrangement and the tax treatment need to be considered together. Don’t describe a contribution to household costs as commercial rent simply to match a depreciation calculator.

Discuss CGT and the report fee before ordering

Request a written fee and scope for any report. Ask whether the price includes an inspection, asset information, later revisions and responses to your tax agent’s questions. We have not established a current nationwide fee range or a standard savings guarantee, so compare actual offers.

Then ask your tax agent about the sale position. The ATO’s rental property guidance notes that capital works deductions claimed or claimable can affect the CGT cost base. A future CGT result cannot be reduced to an assumed percentage of the yard.

Keep the report, supporting invoices and written tax advice with the property records. Our property-value guide helps separate resale assumptions from rental cash flow when you decide whether the overall project is worthwhile.

Frequently Asked Questions