Disclaimer: This calculator provides estimates only and should not be considered financial or tax advice. Depreciation deductions depend on a quantity surveyor report prepared under ITAA 1997 Div 40 and Div 43. The ATO requires a formal report to substantiate depreciation claims. Always consult a registered tax agent or quantity surveyor before lodging a claim. Evercend Pty Limited does not hold an Australian Financial Services Licence.
Property depreciation inputs and results
Division 43 — Building
Division 43 — the original cost to build, not the purchase price.
Buildings constructed before 1985 have no Div 43 entitlement.
Division 40 — Plant and Equipment
Division 40 — fixtures, appliances, carpet, blinds. Use 0 if unsure.
Your tax details
Used to calculate your marginal tax rate and estimated tax saving.
Enter your property details to begin
Enter the construction cost or plant and equipment value, plus your taxable income, to estimate your annual depreciation tax saving.
How property depreciation works
Depreciation lets a property investor claim the decline in value of a building and its fittings as a tax deduction each year. It is a non-cash deduction, which means it reduces your taxable income without you paying anything extra that year. This calculator estimates the two types of property depreciation, capital works and plant and equipment.
Capital works, known as Division 43, covers the building structure. Plant and equipment, known as Division 40, covers removable and mechanical items such as appliances, carpet and air conditioning. This is a model and general information, not tax advice. For an actual claim, a quantity surveyor usually prepares a depreciation schedule.
How to use this calculator
Enter the construction cost
Add the original building construction cost for the capital works estimate, or an estimate if you do not know it.
Add the plant and equipment value
Enter the value of removable assets such as appliances, carpet and blinds.
Choose the method
Select the diminishing value or prime cost method for the plant and equipment.
Read the deductions
The calculator estimates the yearly capital works and plant and equipment deductions.
How this calculator works
Capital works are claimed at a flat rate over a long period. For a residential property where construction started after 15 September 1987, the rate is 2.5% of the construction cost each year for 40 years. Plant and equipment items decline in value over their effective life, which the ATO sets for each asset. You can use the prime cost method, which spreads the deduction evenly, or the diminishing value method, which gives larger deductions in the early years. Assets costing $300 or less can be claimed in full in the first year.
Assumptions used
Assumptions used: the capital works estimate uses 2.5% of the construction cost per year, which applies to residential construction that started after 15 September 1987. The prime cost method is the asset's cost times days held divided by 365, times 100% divided by the effective life. The diminishing value method, for assets first held from 10 May 2006, is the base value times days held divided by 365, times 200% divided by the effective life. The calculator uses the figures and effective lives you enter. For a second-hand residential property first rented on or after 1 July 2017, decline in value on previously used plant and equipment generally cannot be claimed, though capital works and new assets are not affected. The estimate is general information, not tax advice.
Worked example
A residential property built in 2010 had a construction cost of $300,000. The capital works deduction is 2.5% of $300,000, which is $7,500 a year for 40 years.
Separately, a dishwasher costing $1,000 with an effective life of 10 years is claimed under the diminishing value method. The first year deduction is $1,000 times 200% divided by 10, which is $200. The two deductions are added together, and both reduce taxable income without being a cash cost.
These are estimates. A quantity surveyor's depreciation schedule sets the actual construction cost and asset values.
What changes your depreciation deductions
Several things change the depreciation deductions available for an investment property. The main ones are:
Construction date
Capital works apply to residential construction started after 15 September 1987, at 2.5% per year for 40 years.
Construction cost
The capital works deduction is a percentage of the original building cost, not the purchase price or land value.
Plant and equipment
Removable and mechanical assets decline in value over their effective life, set by the ATO for each item.
Method chosen
Diminishing value gives larger deductions early, while prime cost spreads them evenly over the effective life.
Second-hand assets
For a second-hand home first rented from 1 July 2017, decline in value on used plant and equipment generally cannot be claimed.
Effect on CGT
Capital works deductions you claim generally reduce the property's cost base, which can increase the capital gain on sale.
Rates and assumptions used
| Item | Value used | Source |
|---|---|---|
| Capital works rate (Division 43) | 2.5% per year for 40 years, residential construction started after 15 September 1987 | ATO, Work out your capital works deductions |
| Prime cost method (Division 40) | Cost times days held divided by 365, times 100% divided by effective life | ATO, Prime cost and diminishing value methods |
| Diminishing value method (Division 40) | Base value times days held divided by 365, times 200% divided by effective life, for assets first held from 10 May 2006 | ATO, Prime cost and diminishing value methods |
| Immediate deduction | Depreciating assets costing $300 or less can be claimed in full in the first year | ATO, Depreciating assets in rental properties |
| Second-hand assets | For a second-hand home first rented on or after 1 July 2017, used plant and equipment generally cannot be depreciated | ATO, Second-hand depreciating assets |
| Effect on CGT cost base | Capital works deductions claimed are not included in the cost base, which can increase the capital gain on sale | ATO, Cost base of assets |
Figures checked against the sources above on 10 August 2026.
Frequently asked questions
Division 43 is the capital works deduction for the building structure, such as walls, roofing and fixed items. Division 40 is the decline in value of removable and mechanical plant and equipment, such as appliances, carpet and air conditioning. They are claimed separately and can both apply to the same property.
Related calculators and guides
Sources
- •ATO, Work out your capital works deductions
- •ATO, Depreciating assets in rental properties
- •ATO, Second-hand depreciating assets
- •ATO, Prime cost and diminishing value methods
- •ATO, Cost base of assets
Content reviewed and figures checked against the sources above on 10 August 2026.