1. What is Tax Depreciation? Tax depreciation on a residential property is a deduction against assessable income allowing the owner to reduce the amount of taxation payable. An investor is able to claim for two distinct types of depreciation on buildings. The first is Capital Allowance which is a deduction based on the historical construction costs of the property and may include surveying, engineering, architectural and building fees. The second is Plant and Equipment which includes items such as floor coverings, window treatments and fixed equipment i.e. cookers.