Property Depreciation Calculator
Estimate your Division 43 and Division 40 depreciation deductions and the resulting tax saving on your investment property.
Div 40 (plant & equipment) is a rough estimate only. A professional quantity surveyor report is essential for accurate claims. From 9 May 2017, Div 40 on established properties only applies to new assets you install yourself.
How Property Depreciation Deductions Work
Depreciation is one of the most valuable tax deductions available to Australian property investors. Unlike most deductions, you don't actually spend cash each year to claim it — it represents the theoretical wear and tear on the building and its contents. For many negatively geared investors, depreciation turns a pre-tax loss into a larger after-tax benefit.
Division 43 — Building Allowance
Division 43 allows you to claim 2.5% of the original construction cost of a qualifying building every year for 40 years. A building constructed in 2015 for $400,000 generates $10,000 per year in Division 43 deductions — regardless of what you paid for the property. The key rules are:
- The building must have been constructed after 15 September 1987 for residential use, or after 20 July 1982 for commercial use
- The rate is 2.5% per year over 40 years
- You do not need the original building receipts — a quantity surveyor can estimate the construction cost
Division 40 — Plant and Equipment
Division 40 covers removable assets: carpet, blinds, hot water systems, air conditioners, dishwashers, ovens, and smoke alarms. Each item depreciates at its own rate over its effective life. An important rule change from 9 May 2017 means that investors who buy established properties can no longer claim depreciation on second-hand plant and equipment — only on new assets they personally install.
Do You Need a Quantity Surveyor?
For Division 43, a quantity surveyor can estimate the original construction cost where records are unavailable. For Division 40, a depreciation schedule identifies every claimable item and its effective life. The cost of the schedule is also tax-deductible. Most quantity surveyors charge $500–$700 for a standard residential report, which typically pays for itself many times over in the first year's deductions.
Tax Impact
Depreciation deductions reduce your net rental income (or increase your rental loss). At a 37% marginal rate, $15,000 in depreciation saves $5,550 in tax annually — real cash that reduces your holding costs each year.