A Practical Q&A Guide for Property Investors
Furnishing your rental property can boost tenant appeal, reduce vacancy time, and even increase rental returns. But how does it work when it comes to tax? Here’s a clear guide for property owners on what you can (and can’t) claim.
Can you claim furniture in a rental property?
Yes – in most cases. Furniture in an income-producing rental property is considered plant and equipment under the Income Tax Assessment Act. This means it’s a removable item with a limited lifespan, such as beds, sofas, tables, and appliances.
The catch? To qualify for depreciation, the furniture must be brand new and unused when you install it. The ATO provides guidance on the “effective life” of furniture, which generally ranges between 5 and 13 years.
What about short-term rental properties?
The same rules apply. Whether your property is rented long-term or on a short-term basis (such as through Airbnb), furniture depreciation is treated in the same way.
Can you claim the full cost in the year of purchase?
Sometimes. The ATO allows an immediate deduction for assets costing $300 or less. For example, a lamp, side table, or microwave under $300 can be claimed in full in the same financial year.
For items costing more than $300, depreciation is spread across the asset’s effective life. Property investors may also use low-value pooling to accelerate deductions.
What if furniture is damaged by a tenant?
If damage occurs, you may be able to:
- Deduct repair costs in the year you spend them
- Write off the remaining value of scrapped furniture
- Claim depreciation on new replacement items
Landlord insurance can help cover damage costs – and premiums are also tax deductible.
What if the property is only rented part of the year?
You can still claim depreciation, but it must be apportioned to match the time the property was available for rent.
Example: If your rental was available for six months of the financial year, you can only claim 50% of the annual depreciation deduction.
What does “scrapping” mean?
Scrapping occurs when you dispose of a depreciable item before the end of its effective life. If you throw out old furniture, you can claim an immediate deduction for the remaining value. To claim scrapping, you’ll need:
- Proof the item is no longer in use (photos or inventory updates)
- Evidence of disposal
- An updated depreciation schedule
What’s the easiest way to maximise claims?
The most effective approach is to get a Tax Depreciation Schedule prepared by a qualified quantity surveyor. This schedule outlines every eligible deduction over the property’s lifetime (up to 40 years).
It’s also 100% tax deductible and can often uncover thousands in additional deductions you may have otherwise missed.
What records should landlords keep?
To stay compliant and maximise deductions, hold on to:
- Purchase receipts (or have a depreciation specialist assess values if receipts are missing)
- A depreciation schedule from a quantity surveyor
- Lease agreements or booking records showing rental periods
- Documentation for asset disposal, replacement, or scrapping
The bottom line
Furnishing your investment property can deliver strong rental appeal and financial returns, but the real value lies in understanding how depreciation works. With the right strategy and professional guidance, you can ensure your deductions are maximised – and keep more money in your pocket at tax time.