Australia Property Depreciation Calculator 2026 β Div 43 + Div 40
Calculate 2026 Australian investment property depreciation: Division 43 capital works (2.5%/40yr), Division 40 plant & equipment (carpet, blinds, hot water, appliances). Year 1, 5-yr, 10-yr totals. Post-May 2017 rules. AUD formatting.
A$
A$
Typically 50β60% of purchase price for established properties A$
Carpets, blinds, appliances, hot water system etc. Purchase price:
A$0
Year 1 Total Depreciation
A$0
Year 1 Tax Saving
A$0
5-Year Depreciation Total
A$0
10-Year Depreciation Total
Depreciation Breakdown (2025-26)
Australian Property Depreciation 2025-26
Investment property depreciation is one of the most significant tax deductions available to Australian property investors. Two divisions apply: Division 43 (the building structure) and Division 40 (fittings and equipment). Since July 2017, Division 40 on pre-owned items is only claimable for new properties or commercial use.
Division 43 Calculation
Annual Div 43 deduction = Construction Cost Γ 2.5% per year
Eligible: residential built after 15 Sept 1987; commercial built after 20 July 1982
Claim period: 40 years from construction
Example: $350,000 construction cost β $8,750/year Div 43
Eligible: residential built after 15 Sept 1987; commercial built after 20 July 1982
Claim period: 40 years from construction
Example: $350,000 construction cost β $8,750/year Div 43
Division 40 Diminishing Value Method
Year 1 deduction = Opening value Γ (150% Γ· Effective life)
Carpet (8yr): $8,000 Γ 150%/8 = 18.75% β $1,500 Year 1
Hot water (12yr): $2,500 Γ 150%/12 = 12.5% β $312 Year 1
Blinds (5yr): $3,000 Γ 150%/5 = 30% β $900 Year 1
Carpet (8yr): $8,000 Γ 150%/8 = 18.75% β $1,500 Year 1
Hot water (12yr): $2,500 Γ 150%/12 = 12.5% β $312 Year 1
Blinds (5yr): $3,000 Γ 150%/5 = 30% β $900 Year 1
Extended
Top 20 Depreciable Items Table + Year-by-Year Depreciation Schedule
ATO effective life and Year 1 deduction for the 20 most common depreciable items, plus a 10-year depreciation schedule
Top 20 Depreciable Items β ATO Effective Life & Year 1 Deduction
Using diminishing value method. Example values are indicative β actual values depend on brand, model and condition at time of purchase.
| Item | Eff. Life | DV Rate | Example Value | Year 1 Deduction |
|---|
40-Year Depreciation Schedule (Year 1 β Year 40)
Div 43 is straight-line over 40 years. Div 40 uses diminishing value (shown for total fit-out pool). Tax saving calculated at your entered marginal rate.
| Year | Div 43 (Capital Works) | Div 40 (Plant & Equip) | Total Deduction | Tax Saving | Cumulative Tax Saving |
|---|
Frequently Asked Questions
What is Division 43 (capital works) depreciation in Australia?
Division 43 applies to the physical structure of a building. For residential properties built after 15 September 1987, you can claim 2.5% of the original construction cost as a deduction each year for 40 years. For commercial properties or certain other properties, the rate may be 2.5% or 4% depending on when construction started. The 2.5% rate gives $2,500/year in deductions for every $100,000 of construction cost. Note: since 9 May 2017, buyers of second-hand residential properties cannot claim Division 40 (plant & equipment) on previously used items unless the property is used for commercial purposes.
What is Division 40 (plant and equipment) depreciation?
Division 40 covers individual depreciable assets β the fixtures, fittings, and equipment in the property. Each item has an ATO-determined "effective life" from which you calculate the depreciation rate using either the prime cost method (straight line) or the diminishing value method (150% of prime cost rate). Common items: carpet (8 years), blinds (5 years), hot water system (12 years), air conditioning units (10 years), dishwasher (10 years), oven/cooktop (12 years). A quantity surveyor prepares a depreciation schedule covering all qualifying items.
Do I need a quantity surveyor to claim property depreciation?
You don't legally need one, but the ATO strongly recommends using a registered quantity surveyor (QS) to prepare a depreciation schedule. A QS is one of the few professionals recognized by the ATO to estimate construction costs for tax purposes. The schedule typically costs $300β$800 and is itself tax-deductible in the year paid. For a property worth $500,000 with significant construction and fit-out, the total first-year depreciation deductions often exceed $10,000, making the QS fee highly worthwhile.
What happened to property depreciation rules after the 2017 Budget?
The May 2017 Federal Budget changed rules for residential investment properties from 1 July 2017: (1) Buyers of second-hand residential properties can no longer claim Division 40 depreciation on plant & equipment that was previously owned or used β only new items installed after purchase qualify. (2) Division 43 (capital works) is unaffected β you can still claim 2.5% on construction costs for qualifying buildings regardless of when purchased. These changes do not affect commercial property, new builds purchased directly from developer, or properties used for commercial short-term rental (Airbnb may or may not qualify).
What is the tax benefit of property depreciation?
Property depreciation is a non-cash deduction β you don't spend additional money to claim it. For a property creating $15,000 in depreciation deductions and a taxpayer on 37% marginal rate, this reduces tax by $5,550 per year. Over 10 years, that is $55,500 in tax savings without any additional cash outlay. The deductions reduce the cost base of the property for CGT purposes (the ATO "claws back" depreciation claimed when you sell), but the time value of deferring tax is still beneficial. A depreciation schedule often costs $500 and generates $3,000β$15,000 in first-year deductions.