Can I Claim the Cost of a Quantity Surveyor as a Tax Deduction?
Quantity surveyor reports unlock depreciation claims on rental property. Here's what's confirmed about Division 40/43 — and what still needs a tax agent.
Can I Claim the Cost of a Quantity Surveyor as a Tax Deduction?
[REVIEW: to be reviewed by a registered tax agent — arranged by
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Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
What does a quantity surveyor do for a property investor?
A quantity surveyor is a specialist who inspects a rental property and estimates the construction costs of the building, so that a depreciation schedule can be prepared for tax purposes. The schedule then feeds two separate deduction categories under the Income Tax Assessment Act 1997: Division 43 (capital works — the building and its fixed structure) and Division 40 (depreciating assets — items with a limited effective life, like ovens, carpets or air-conditioners).
For residential rental capital works built on or after 16 September 1987, the ATO’s published rate — current as at July 2026 — is 2.5% of construction cost per year, claimable over 40 years from completion and apportioned to the days the property earned income (see the ATO’s capital works deductions guidance). Taxation Ruling TR 97/25 is the piece that determines whether a quantity surveyor’s estimate, rather than a receipt for the original build, is an acceptable basis for the claim — and it names a quantity surveyor explicitly among the “appropriately qualified” people the ATO will accept to estimate construction cost where the original figure can’t be established, alongside a clerk of works, a supervising architect, or an experienced builder. The same ruling notes that valuers, real estate agents, accountants and solicitors generally aren’t treated as qualified for this purpose unless they hold other relevant expertise.
Is the quantity surveyor’s fee itself a tax deduction?
This is a different question from “can I depreciate my building” — it’s asking whether the invoice you pay the surveyor is, in itself, a deductible expense.
The ATO’s Rental properties guide lists “quantity surveyor’s fees” among the expenses you can claim an immediate deduction for on a rental property — as with the other items on that list, this only applies to the extent you (the owner) actually incur the cost, rather than a tenant. That’s a separate question from the depreciation deductions the report itself supports, and a registered tax agent can confirm exactly when the fee is claimed and how it sits alongside your other rental deductions for the year.
Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
Division 40 vs Division 43 — what the report is actually for
The two regimes are mutually exclusive for the same expenditure, and they behave differently:
| Division 43 (capital works) | Division 40 (depreciating assets) | |
|---|---|---|
| Covers | Construction cost of the building and fixed structure | Separately identifiable plant and equipment (ovens, carpets, air-conditioners, furniture) |
| Rate | 2.5% p.a. of construction cost, over 40 years (builds from 16 Sep 1987; 4%/25yr applies only to specific older categories) | Decline in value over each asset’s effective life |
| Second-hand limits | None — a buyer of an established property can still claim remaining capital works deductions | Restricted for second-hand assets in residential property (see below) |
The second-hand asset restriction almost every established-property buyer hits
Since 1 January 2018, a rule inserted into the tax law (new s40-27, added by the Treasury Laws Amendment (Housing Tax Integrity) Act 2017) further reduces — in practice, usually to nil for an ordinary residential landlord — the Division 40 deduction for a depreciating asset in a residential rental property where either:
- you didn’t hold the asset when it was first used or installed by anyone (it’s second-hand), or
- the asset was ever used in one of your own residences, or used for a non-taxable purpose.
The rule applies to assets acquired under contracts entered into (or otherwise acquired) at or after 7:30pm AEST on 9 May 2017. There are exceptions: certain assets supplied as part of a genuinely new residential premises, assets allocated to a low-value pool, and a set of excluded entity types — a corporate tax entity, a superannuation fund that is not self-managed, a managed investment trust, or a public unit trust. Notably, an SMSF is not on that excluded list, so an SMSF-owned residential property is caught by the restriction the same way an individual’s is.
What this means in plain terms: if you buy an established (not brand-new) residential investment property, a quantity surveyor’s report is likely to find comparatively little left to claim under Division 40, because most existing plant and equipment was already “used” by a previous owner or occupant. The report’s main value in that scenario is usually the Division 43 capital works claim on the building structure, which isn’t affected by this restriction.
Does it work differently depending on how you hold the property?
Yes — and this is a see-a-professional area for every structure, not a one-size answer:
- Individually — depreciation deductions flow through to your own tax return at your marginal rate.
- Company — deductions are dealt with at the company level, not passed straight through to shareholders.
- Discretionary/family trust — the trustee holds legal title; net income (after deductions) is generally taxed in the hands of beneficiaries presently entitled to it, in proportion to their entitlement.
- SMSF — subject to superannuation-law constraints the other three don’t carry (the sole purpose test, in-house asset limits, related-party rules), on top of the s40-27 restriction noted above, which does apply to SMSF-held property.
No ATO or Moneysmart page on SMSFs and property ranks these structures against each other, and none of this determines which structure is right for you — that depends on your personal and financial circumstances. Superannuation rules are complex and penalties for breaches are significant — seek advice from a licensed financial adviser before making SMSF decisions.
Does any of this apply to fractional investments like Brix?
Not in the same way. A quantity surveyor’s report, and the Division 40/43 claims it supports, are built around direct legal ownership of a rental property — you hold the title, you commission the report, you claim the deduction. A Brix is structured differently: it’s a financial product representing a fractional economic interest in a property, not a transfer of legal or beneficial ownership of the land itself.
Distributions from a fractional holding may be assessable income in the year you receive them, and the ATO doesn’t publish anything that characterises “fractional property” distributions as a category in their own right — the tax treatment depends on the specific legal structure and the product’s own tax statement. That means a MyBrix investor doesn’t personally commission a quantity surveyor’s report or claim Division 40/43 deductions the way a direct owner would; whatever building-related deductions exist sit inside the underlying property structure, not with the individual Brix holder. If you’re weighing a direct, geared purchase against a smaller, unfunded stake in residential property, it’s worth understanding both mechanics side by side before deciding.
Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
Keeping records
Whichever structure applies, keep the quantity surveyor’s report itself, the invoice for the fee, and any supporting documents for as long as the ATO requires records to be kept for the deductions they support. The retention period differs depending on whether a claim relates to an ongoing depreciation deduction or to the property’s eventual capital gains tax position — a registered tax agent can confirm exactly how long applies to your situation.
The bottom line
A quantity surveyor’s report is the standard way to substantiate Division 43 capital works and Division 40 depreciating-asset claims on a rental property — but for an established property bought since 9 May 2017, the second-hand asset rule usually limits the Division 40 side to close to nil, leaving the building’s capital works claim as the main game. The surveyor’s own fee is itself an immediately deductible rental expense per the ATO’s own guidance — but exactly how the underlying construction-cost estimate is qualified, and how any of this maps onto your specific ownership structure, are questions this article deliberately doesn’t answer with a verdict — they’re exactly what a registered tax agent is for.
Our guide to what property investment involves in Australia covers the broader mechanics, costs and risks if you’re weighing this decision as part of a first investment. If you’re specifically comparing a negatively geared purchase against other structures, our piece on cash-flow-positive versus negatively geared property is a useful next read.
General information only. This article provides general information and does not take into account your objectives, financial situation or needs. It is not financial product advice, tax advice or legal advice. Consider whether the information is appropriate for your circumstances and seek advice from a licensed professional before making financial decisions. MyBrix Pty Ltd ABN 37 669 479 636 is authorised representative 1304961 of Australian Financial Licensing Group, AFS Licence No. 269868. Brix are issued by MyBrix Properties Pty Ltd ACN 669 491 338. Before acquiring or selling Brix, read the Product Disclosure Statement and Target Market Determination available at mybrix.com.au.
