Have You Considered Leasing Out Your Investment Property Furnished?

Furnishing your rental property could offer additional benefits through depreciation deductions. When you furnish a rental property, the furnishings are classified as Division 40 plant and equipment assets. This allows you to claim depreciation for their wear and tear over their effective lives, which can reduce your taxable income.

To help you evaluate the benefits of renting your property furnished, Australian Tax Depreciation Services (ATDS) has answered some commonly asked questions on this topic.


Q: Is furniture tax-deductible for a rental property?
A: Yes, in most cases, furniture purchased for an income-producing property is eligible for depreciation deductions. Depreciation accounts for the natural wear and tear of property and its assets over time. The Australian Taxation Office (ATO) allows investors to claim this as a deduction.

Furniture is generally claimed as a plant and equipment deduction, which applies to removable items within the property.

To claim depreciation for rental property furniture, ensure that:

  • The items are purchased when the property is income-producing or genuinely available for rent.
  • You directly incur the cost of the furniture.

Q: How can I claim depreciation deductions for furniture?
A: The most effective way to claim all deductions is by obtaining a tax depreciation schedule. ATDS provides comprehensive schedules covering all available deductions for the lifetime of a property (up to 40 years).


Q: Can I claim depreciation on second-hand furniture?
A: No, depreciation deductions cannot be claimed on second-hand furniture due to 2017 legislative changes. These rules apply even if the second-hand furniture still has remaining depreciable value.


Q: Can furnishing a property increase rental income?
A: Furnished properties can command higher rental rates, often between 15% to 70% more, depending on location and property type. However, this benefit should be weighed against potentially reduced tenant demand, as many renters prefer unfurnished properties. It’s crucial to research your local rental market before making a decision.


Q: What type of tenants does a furnished property attract?
A: Furnished properties tend to attract:

  • Travellers.
  • Young tenants without their own furniture.
  • Professionals on short-term work assignments.

Leases for furnished properties are typically shorter (3–6 months) and are more common in metropolitan areas or regions with transient populations.


Q: What happens if my furniture is damaged?
A: As a landlord, you’re responsible for maintaining both the property and the furniture/appliances provided. If your furniture is damaged by tenants, landlord insurance can cover malicious or accidental damage, as well as loss of rental income.

Ensure your insurance policy includes adequate coverage for furnished properties. For more information, contact ATDS for insurance options.


Q: Should I consider keeping the property unfurnished?
A: Unfurnished properties often appeal to long-term tenants, leading to longer lease agreements (6–12 months). Tenants may prefer to use their own furniture, and providing a furnished option could deter some prospective renters.

If you’re unsure, consider advertising your property as unfurnished while offering a furnished option at an additional cost.


Furnishing an investment property has its pros and cons. At ATDS, we recommend evaluating your circumstances and financial goals to determine the best approach. Contact us today to maximize your property’s tax benefits and rental potential.