Depreciation Calculator Australia: What Your Investment Property Can Claim

Construction that started after 15 September 1987 gets 2.5% of the construction cost a year. The claim runs for 40 years from the date construction was completed. Construction that started from 18 July 1985 to 15 September 1987 gets 4% a year for 25 years. A home started before 18 July 1985 gets no capital works deduction for the original building. A few homes started after 15 September 1987 under earlier contracts also get 4%. Your quantity surveyor will know.

The figure is the cost of construction. The law leaves out the land, demolition, site preparation, landscaping and the fittings, which are claimed separately. The ATO won't accept the purchase price, the insured cost or the replacement cost in its place. You can only claim for the part of the year the property was rented or available for rent. So year one is the annual amount × your days of ownership ÷ 365. A year with 29 February in it counts 366 days.

The law counts the claim in days from when the building was first used after completion, whoever owned it, and stops once the whole construction cost has been deducted. At 2.5% that takes 14,600 days, so leap days bring the last claim a few days before the 40th anniversary. The calculator counts what is left from your settlement date. A home finished in November 2005 has about 19 years to run for a buyer settling late in 2026.

Each fitting is written off over its effective life. This calculator uses the Commissioner's current determination, LI 2025/20, the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025. The lives come from its table for residential property operators. Effective lives used to be published in TR 2022/1 as well. The ATO withdrew that ruling at the end of October 2025. A split system is 10 years. Carpet is 8, a hot water system 12 and a dishwasher 8.

There are two methods. Diminishing value claims base value × (days held ÷ 365) × (200% ÷ effective life). In year one the base value is the cost. After that it is the written-down value. Prime cost claims cost × (days held ÷ 365) × (100% ÷ effective life), the same amount every full year. Diminishing value front-loads the deduction. Once you pick a method for an item, you keep it.

A fitting that costs $300 or less is claimed in full in the year you start using it. It has to stand alone. If it is part of a set, or one of several identical items, that together cost more than $300, it misses out. Four dining chairs at $250 each don't qualify. Older assets can also carry older lives. Carpet and dishwashers acquired from 1 July 2004 to 30 June 2019 were 10 years.

If you bought an established home after 7:30pm AEST on 9 May 2017, you can't claim the fittings already in it. The oven, carpet and air conditioner came with the house, so they give you nothing. Capital works on the building is untouched by this rule. So is anything you buy new and install yourself. In the calculator, tick New for each item you bought new.

Some owners sit outside the rule. It doesn't apply if you bought before that time and the home was a rental before 1 July 2017, or if you use the property in carrying on a business of letting rental properties. It also skips corporate tax entities, super funds other than SMSFs, public unit trusts, managed investment trusts, and unit trusts or partnerships made up only of those. An SMSF is caught, the same as an individual.

A brand new home works differently. You can claim its fittings if no one was entitled to a deduction for them before you. On top of that, either no one lived in it before you bought it, or you bought it within 6 months of it being built or substantially renovated. Choose brand new or substantially renovated as the property type for that case.

This is the scenario the calculator opens with. Construction of a townhouse started in March 2010 and finished on 1 December 2010. The quantity surveyor puts the construction cost at $350,000. You settle on 1 November 2026, pay 39% tax including the Medicare Levy, and use diminishing value.

Capital works is $350,000 × 2.5% = $8,750 a year. You own it for 242 days of 2026-27. So the first-year claim is $8,750 × 242 ÷ 365 = $5,801. The last of the $350,000 is claimed on 20 November 2050, which leaves 24.1 years of claims.

You put in a new split system for $2,400 and new carpet for $4,000. You also replace the smoke alarms for $240. The split system gives $2,400 × 242 ÷ 365 × 200% ÷ 10 = $318. The carpet gives $4,000 × 242 ÷ 365 × 200% ÷ 8 = $663. The smoke alarms cost $300 or less, so the full $240 comes off in year one. The $1,800 hot water system came with the house. It is second-hand, so it gives nothing.

Year one totals $7,022 of deductions, worth $2,739 in tax at 39%. Over ten years the deductions come to $90,734. The tax saving comes to $35,388. Three of those years hold a 29 February, so their capital works claim is $8,774.

Most buyers of an established home don't know what it cost to build. The ATO lets you use an estimate from a quantity surveyor or another qualified person, such as a builder who prices similar projects. The fee is deductible in the year you pay it. A schedule also lists each fitting and its value, which the plant and equipment side needs.

If you don't have the construction cost, leave the field empty. For a new build, it is the build contract price, less any land, demolition, site preparation, landscaping and the fittings you list in the calculator. For anything else it comes from the schedule. Our guide to depreciation schedules for investment property covers what the report costs and when it pays for itself.

Capital works deductions raise your capital gain when you sell. The ATO says capital works deductions can't be included in the cost base or reduced cost base, so claiming them lowers your cost base. The capital works column in the 10-year table is how far your cost base drops over that time.

Put your capital works total into the capital gains tax calculator to see what it does to the tax on a sale.