Property Depreciation Calculator (Div 40 & 43)

Estimate Div 43 capital works (2.5%/yr) and Div 40 plant & equipment depreciation deductions for your investment property.

Updated 2025-26 FYData stays on your deviceATO sourced data

Property Type

2nd-hand can't claim Div 40 plant & equipment per 2017 rules

Construction Cost

Year Built

Plant & Equipment Value (carpets, dishwasher, blinds...)

Marginal Tax Rate

Year 1 Tax Saving

$7,030.00

on $19,000.00 deduction

Div 43 (Capital Works)

$10,000.00

34 yrs left

Div 40 (Plant & Equip.)

$9,000.00

DV ~30%/yr

5-Year Projection

Yr	Div 43	Div 40	Total	Tax Saving
1	$10,000.00	$9,000.00	$19,000.00	$7,030.00
2	$10,000.00	$6,300.00	$16,300.00	$6,031.00
3	$10,000.00	$4,410.00	$14,410.00	$5,331.70
4	$10,000.00	$3,087.00	$13,087.00	$4,842.19
5	$10,000.00	$2,160.90	$12,160.90	$4,499.53
5-yr total			$74,957.90	$27,734.42

Estimates only — get a Quantity Surveyor depreciation schedule (~$700, fully tax deductible). Div 43 (capital works) at 2.5% over 40 years for buildings post-15 Sep 1987. Div 40 (plant) only allowed for new property or installed by you (post-2017 rule). Plant & equipment uses diminishing value method with item-specific effective lives per TR 2024/1.

Disclaimer

This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available ATO data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.

Frequently Asked Questions

What's the difference between Div 40 and Div 43?

Division 43 (Capital Works) covers the structural building — bricks, concrete, fixed walls, tiles. Claimed at 2.5% per year for 40 years (residential built post-15 Sept 1987). Division 40 (Plant & Equipment) covers removable items like carpets, blinds, dishwasher, hot water systems, smoke alarms — claimed via diminishing value or prime cost over each item's effective life (typically 5–15 years).

Why can't I claim Div 40 on a second-hand property?

Per the Treasury Laws Amendment (Housing Tax Integrity) Act 2017, you can only claim Div 40 plant & equipment if you're the original purchaser of a NEW property (built after 9 May 2017) OR you installed/paid for the asset yourself. Second-hand buyers can't depreciate existing fixtures — they're added to the property's cost base for CGT instead.

Do I need a Quantity Surveyor's report?

Highly recommended for any property purchased after 1985. ATO TR 97/25 specifies that QS reports are the appropriate evidence for construction cost estimates when actual records aren't available. Costs ~$500–$900 (fully tax deductible) and typically pays for itself many times over in the first year alone for a modern property.

Is depreciation 'free money' or just deferred tax?

Mostly deferred. Div 43 deductions reduce your property's CGT cost base when you sell, so you'll pay extra CGT then. With the 50% CGT discount, however, you effectively claim 100% of the deduction now and pay tax on only 50% of the recoupment later — making it a net tax benefit. Div 40 doesn't add back to cost base, so it's a pure tax benefit.

What is Property Depreciation?

An estimate of the annual tax depreciation deductions available on an investment property under Division 43 (Capital Works — the building structure) and Division 40 (Plant & Equipment — removable items like carpets, blinds, dishwashers). These are non-cash deductions that reduce taxable income.

How this calculator works

Choose new or second-hand property, enter the construction cost and year built, plus the value of plant & equipment (for new property only). The calculator computes Division 43 at 2.5%/year for buildings post-1987, and Division 40 using diminishing value (~30%/yr average). It projects total deductions and tax savings over the next 5 years and shows your year-1 tax refund based on marginal rate.

Division 43: Capital Works (The Building)

Covers structural elements: bricks, concrete slab, fixed walls, roof, tiles, built-in cupboards. Claimed at 2.5%/year for 40 years if construction started after 15 September 1987 (residential) or 21 August 1979 (commercial). Some short-stay accommodation (caravan parks, manufactured home villages) qualifies for 4% over 25 years. The 'cost' is the original construction cost, not what you paid for the property — get a Quantity Surveyor (QS) report if you don't have invoices.

Division 40: Plant & Equipment

Removable items installed in the property: carpet, blinds, curtains, hot water systems, dishwashers, ovens, range hoods, smoke alarms, air conditioning, garage door motors. Each item has its own 'effective life' per ATO TR 2024/1: carpets 8 years, blinds 10 years, hot water systems 12 years, etc. Most claim diminishing value method (faster early-year deductions); prime cost (straight-line) is also available.

The 2017 Rule Change for Second-hand Property

Per Treasury Laws Amendment (Housing Tax Integrity) Act 2017, you can ONLY claim Division 40 if: (a) you bought a NEW property (built after 9 May 2017), or (b) you personally installed/paid for the asset. Second-hand property purchasers can no longer depreciate existing fixtures — instead, those costs are added to the property's CGT cost base. Division 43 (the building) remains claimable on any property regardless of new/second-hand status.

Why You Need a Quantity Surveyor Report

ATO Tax Ruling TR 97/25 specifies that QS reports are the recognised method for estimating construction costs when actual records aren't available. Real estate agents, accountants, and valuers are NOT qualified to estimate construction costs for tax purposes. Cost: $500–$900 (fully tax deductible). Most modern apartments and recent houses generate $5,000–$15,000 of first-year depreciation — easily paying back the QS fee many times over.

CGT Recoupment on Sale

Division 43 deductions reduce your property's CGT cost base when sold — meaning a higher capital gain and more CGT to pay. With the 50% CGT discount, you effectively keep 50% of the deduction long-term (paid 100% deduction now, recoup ~50% as CGT later). Division 40 doesn't reduce cost base, so it's a pure tax benefit with no recoupment. This makes early-year Div 40 deductions especially valuable for new-property investors.

Updated for the 2025-26 financial year (1 July 2025 to 30 June 2026).

Official Sources

All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.

Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.

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