Tax depreciation schedules help you correctly deduct the depreciation of property assets over several years. You have the property professionally inspected — you can't do this yourself — and the schedule is then drawn up. There are limited times when you need to get a new schedule, including when you sell or renovate the property. Working with a good tax accountant and depreciation inspection company will give you the best chances of maximising deductions over the years.
When The Property In Question Is Sold
When you sell your property or buy property from someone who already has a depreciation schedule for it, the current depreciation schedule is effectively cancelled. Your depreciation schedule does not transfer to the person who buys your property, and you do not get to continue the depreciation schedule that the previous owner had when you bought their property. Any property that is sold or transferred (e.g., from family without a sale) needs a new depreciation schedule if the new owner intends to take deductions.
When You Make Major Changes To The Property
When you make major changes, additions, renovations and upgrades to the property, you're introducing new assets, in a way. You're making part or all of the property "new," even if the structure itself isn't new, and that changes how the property depreciates over time. That means you need a new depreciation schedule. Note that once a depreciation schedule expires, it's not renewable, but if you renovate the property or make other substantial changes, you can have a new depreciation inspection done and get a new schedule.
When You Haven't Had A Depreciation Schedule Before On Older Property
You actually aren't required to get a depreciation schedule for your property if you're not planning to deduct anything related to depreciation. But you can change your mind and get a new depreciation schedule for older property if you want, and then you may be able to revise your last tax filing or two. You would want to consult with a tax accountant before making this move, both to ensure it's the correct thing to do and to make sure you record the deductions properly.
Tax depreciation can help you save money over the course of many years on your property. Even smaller rental properties are eligible. Work with a good tax accountant and depreciation inspection firm to get the inspection scheduled and the depreciation schedule finalised.