Depreciation and renting out a former main residence This simple strategy to increase tax deductions. @BMT Tax Depreciation has recently pointed out* the potential benefits of using the Prime Cost method of depreciation on a property that was formerly the main residence but is later rented out. The Diminishing Value method generally results in a higher claim in the early years, but where you are living in the property you will generally not be able to claim depreciation at this point and the higher deductions will be wasted. The Prime Cost method generally results in a higher claims in later years (generally from about year 4 or 5 onwards) so this Prime Cost method of claiming depreciation may result in greater tax savings in situations like this. *On this thread Depreciation: Prime Cost Method vs. Diminishing Value Method See BMT’s PDF with the graphs too.