Calculator
Property Depreciation Calculator (Division 40 / 43)
Property Depreciation Calculator (Div 40 / Div 43)
Division 43 — Capital Works
Division 40 — Plant & Equipment
Year 1 Total Deduction
$13,250
Deduction Analysis
At 2.5% per year, the $350,000 of construction cost yields $8,750 of Division 43 deduction for 19 more years, and the $45,000 of plant & equipment adds $4,500 (diminishing value method) in year one. Together that is $13,250 of deductions — about $5,167.5 of tax back at your 39% marginal rate, and $24,249.4 over the 5-year projection.
*Estimates only. Actual Division 40 and Division 43 deductions depend on a quantity surveyor's schedule, the asset's construction date, its condition and ATO effective-life determinations, which vary property by property. This tool is not a tax depreciation schedule and not tax advice — confirm claims with a qualified tax agent.
Australia's Two-Part Property Tax Deduction
Property depreciation is the largest non-cash deduction Australian residential investors can claim — and one that around half of investment property owners still never claim. The ATO splits the write-off into two buckets. Division 43 covers capital works: the bricks, mortar, structure, and later renovations — deducted as a flat allowance (2.5% per year for construction that began on or after 18 July 1985) on the construction cost, for a fixed window. Division 40 covers plant and equipment — carpets, blinds, hot water systems, air conditioners, ovens, paint, floor coverings — deducted on the asset's value over its ATO effective life, faster on the diminishing-value method. For many investors the combined deduction is $5,000-$15,000 a year, worth thousands in real tax saved, claimed without spending a dollar out of pocket. The rules changed from 9 May 2017, however: for residential properties, second-hand owners generally cannot claim deductions on existing plant and equipment bought from 1 July 2017, so the value of new fixtures and post-purchase renovations now matters more than what was in the property when you bought it. This calculator estimates your year-one and multi-year deductions from both divisions and converts them into dollars of tax saved at your marginal rate, so you can see what a quantity surveyor's schedule is actually worth before you pay for one.
How the ATO Splits the Deduction
Division 43 (capital works) is a straight-line allowance on construction cost: 2.5% per year for work that commenced on or after 18 July 1985 and was completed after 27 February 1992 (older eligible work uses 4%), claimable over 40 years from the construction date. So a dwelling built in 2005 with $350,000 of construction cost yields about $8,750 per year while any of its 40-year window remains. Division 40 (plant & equipment) uses the ATO effective-life tables. On the prime-cost method the deduction is value ÷ effective life, evenly each year. On diminishing value — usually the faster early-year option — it is 200% ÷ effective life applied to the asset's opening value, front-loading deductions. For plant acquired from 1 July 2017 in a second-hand residential property, only genuinely new or substantially renovated items are claimable; the pre-existing fixtures are not. This calculator multiplies each year's total deduction by your marginal rate (including Medicare Levy) to show the actual tax saved, and projects the schedule year by year so you can see when the Div 43 window closes and when diminishing-value claims taper off.
Expert Insights
The Surveyor's Schedule Pays for Itself Many Times Over
A quantity surveyor's depreciation schedule typically costs $600-$900 and is itself tax-deductible. Because surveyors can estimate construction costs even when records are missing, and can identify assets you'd never think to claim (concrete driveways, fencing, kitchen joinery), the extra deductions they find commonly dwarf the fee in the first year alone. This calculator gives you a ballpark of what that schedule is worth — run it before you engage one so you can judge the quote.
Diminishing Value Front-Loads Your Biggest Years
Most investors claim the most depreciation in the early years of ownership, when interest deductions and other costs are already high anyway. Diminishing value maximises that early stack, then tapers — which suits investors in their peak tax years who expect income to fall later. Prime cost spreads the claim evenly and can suit lower-income investors or those who prefer simpler, steadier deductions. You can't switch methods on an asset once chosen, so the decision matters.
Post-2017 Rules Made New Plant the Key Lever
Since the 9 May 2017 changes, second-hand residential plant inherited with a purchase is generally non-claimable. That makes every dollar you spend on new capital improvements after settlement — new flooring, blinds, hot water systems, air conditioning, kitchen upgrades — claimable, while doing nothing means your Div 40 schedule shrinks to just the Div 43 structural allowance. Timing renovations within the same financial year as purchase can pull a large lump of deductions forward into year one.
Actionable Tips
- 1
Check the Construction Date Before Buying
The Div 43 window runs 40 years from construction commencement. A property built in 1990 stops claiming capital works in 2030 regardless of when you buy it. Before making an offer, check the build year with council records or the surveyor — a 1983 build might carry no Div 43 at all, while a 2010 build has decades left. The calculator's construction-year slider shows exactly how many years remain.
- 2
Keep Receipts for Everything You Add
Any fixture you install or capital improvement you make after settlement is claimable under Div 40 (or Div 43 for structural renovations). Keep receipts and note the date of installation — the deduction starts when the asset is first used or installed ready for use, and the ATO effective life runs from there. A folder of receipts handed to a surveyor at tax time is the cheapest way to maximise the schedule.
- 3
Re-Run This After Every Renovation
When you renovate or refurbish between tenants, add the spend to the plant value (or construction cost if structural) and re-run the projection. Large refurbishments between tenancies can add thousands of dollars of additional annual deductions, and the diminishing-value method rewards doing it sooner rather than later. Treat the depreciation schedule as a living document you update with the property, not a one-off report filed away.
Real-World Examples
Rachel Almost Left $12,000 Claimed Away
Rachel had owned a modest investment unit for three years without a depreciation schedule, assuming it wouldn't be worth the surveyor's fee on an older property. When she finally ran the numbers, the unit built in 1996 still had $6,200/yr of Div 43 left, and the blinds, carpets and hot water system she'd replaced added another $2,300 in year one. At her marginal rate that was nearly $3,300 of extra tax back every year — about five times the schedule's cost.
Daniel Timed His Reno Into Year One
Daniel bought a 2004 townhouse in March and planned a $38,000 refurbishment — kitchen, flooring, air con. His tax agent suggested settling the remaining works before 30 June so the full spend landed in the same financial year as purchase. Combined with the existing Div 43 allowance, his first-year deduction stack passed $14,000, and the diminishing-value method front-loaded another $5,000 of plant claims. The timing decision alone was worth several thousand dollars of extra tax saved in year one.
Priya Chose Prime Cost For a Lower-Income Year
Priya planned parental leave with heavily reduced income in years two and three of owning her investment house. Her accountant modelled diminishing value versus prime cost on the same schedule: diminishing gave her more in year one — when she barely needed it at a low marginal rate — while prime cost spread the claim evenly through the leaner years where every deduction mattered more. She elected prime cost for most assets and came out ahead over the holding period. The method choice, not just the amounts, was the strategy.
Glossary of Terms
- Division 43 (Capital Works Allowance)
- The ATO deduction for the structural construction cost of a building — bricks, mortar, fixed structural items — claimed at 2.5% per year over a 40-year window from the construction date.
- Division 40 (Plant & Equipment)
- The ATO deduction for removable or mechanical assets in a property — carpets, blinds, hot water systems, air conditioners, ovens — deducted over each asset's ATO effective life using prime cost or diminishing value.
- Effective Life
- The number of years the ATO determines an asset can be used, which sets the annual depreciation rate. A 10-year effective life on diminishing value deducts 20% of the opening value in year one.
Frequently Asked Questions
Everything you need to know about this topic.
Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.