Granny flats – the small buildings with big deductions

In recent years, BMT Tax Depreciation has seen national growth in the number of tax depreciation schedule requests for granny flats.

The popular investment continues to prove to be a lucrative financial booster. However, many investors don’t take advantage of the depreciation deductions available from the smaller buildings.

What is property depreciation?

Depreciation is the natural wear and tear of a property and its assets over time. While most assets depreciate, only owners of income-producing properties, such as investors and businesses, can claim it as a tax deduction each financial year.

There’s no ‘size limit’ to what can be depreciated, almost anything income-producing allows the owner to claim depreciation on it. This includes granny flats and prefabricated buildings. An obligation-free depreciation estimate from a specialist quantity surveyor, such as BMT, unveils just how much an investor could claim.

Can homeowners claim granny flat depreciation if it’s built on their own property?

The short answer is yes. As long as the granny flat is used as an investment property, depreciation can be claimed.

What many don’t realise is that depreciation can also be claimed on shared areas using pro-rata calculations. For example, if both the granny flat tenant and the homeowner have access to the property’s pool, the owner can claim a partial deduction on the area and the assets it holds, such as outdoor furniture.

Can an investor claim depreciation on both a rental-house and granny flat on the one property?

This is a common move made by savvy investors with the means to do it. A granny flat and house on the one property produces a dual income and double the depreciation deductions.

A tax depreciation schedule will allow the investor to claim depreciation on both dwellings. Every detail is recorded in the schedule from the assets within the buildings to the roofing fixtures and the mailboxes.

The below case study covers the first-year deduction from a new two-bedroom granny flat and the difference it makes to their cash flow.

 The investor can claim a $7,000 depreciation deduction in the first full financial year alone. This turns the property’s negative cash flow into a positive one, with a difference of $50 per week.

Claim depreciation with the industry specialist

Investors can claim the most depreciation possible with a BMT Tax Depreciation Schedule. BMT guarantee to find double their fee in the first full financial year claim, or there will be no charge for their services.

The schedule fee is also 100 per cent tax deductible, so there’s truly nothing to lose. Investors can contact BMT on 1300 728 726 or

Request a Quote to discuss their depreciation needs.