The Finance Algorithm

Depreciation Schedule Estimator

Estimate depreciation deductions on a residential rental property: capital works (Division 43) on the building and plant and equipment (Division 40), under current ATO rules.

Updated October 2026Built and checked by MaverickHow it's calculatedReport an error

Your numbers

Updates as you type
$
$350k

What the building cost to construct (not the purchase price, and excluding land), from a quantity surveyor's report or the builder's contract

2,005

Capital works deductions run for 40 years from completion. Construction must have started after 15 September 1987.

$
$0

Capital works you paid for, such as a new bathroom or extension. Claimed at 2.5% a year.

$
$0

Cost of assets you can claim: ones you bought new, or those in a new property no one lived in that you bought within 6 months of it being built. Second-hand assets in a home bought after 9 May 2017 can't be claimed.

10

The ATO sets an effective life for each asset; your quantity surveyor's report lists them. The diminishing value rate is 200% ÷ effective life.

The button asks our AI to explain these figures in words.

Depreciation schedule

Year 1 deduction

$8,750

10-year total

$87,500

Capital works (Div 43)

$8,750/yr

19 yrs of building claims left

Plant & equipment yr 1

$0

Diminishing value, 20% a year

Capital works vs plant & equipment, year by year

Capital works is 2.5% a year until the 40-year period ends. Plant & equipment falls each year under the diminishing value method.

  • Capital works
  • Plant & equipment
$8,750y1$8,750y2$8,750y3$8,750y4$8,750y5$8,750y6$8,750y7$8,750y8$8,750y9$8,750y10

Total annual deduction declining over time

Plant & equipment shrinks each year; capital works holds steady until its 40 years run out.

$0$2,188$4,375$6,563$8,750Yr 1Yr 3Yr 5Yr 6Yr 8Yr 10
Built from your figures. These deductions use the construction cost and asset values you entered, which normally come from a quantity surveyor's depreciation schedule. Year 1 assumes a full year of ownership; the first year is reduced pro rata for part-years.

How it works

Depreciation lets the owner of a rental property deduct the cost of the building and its fittings over time. There are two parts. Capital works (Division 43) covers the building itself: 2.5% of the construction cost each year for 40 years from completion, where construction started after 15 September 1987. Plant and equipment (Division 40) covers removable assets such as appliances, carpets and blinds, written off over each asset's effective life. Since 9 May 2017, second-hand assets already in an established home can't be claimed by a new owner who buys it as an individual investor, but assets you buy new still can. This estimator works from the construction cost and asset values you enter, which normally come from a quantity surveyor's depreciation schedule.

  1. 1Enter the original construction cost of the building (from a quantity surveyor's report or the builder's contract).
  2. 2Enter the year construction was completed.
  3. 3Add the cost of any structural renovations you paid for.
  4. 4Add the cost of plant and equipment you can claim, and their average effective life.
  5. 5See the first-year and ten-year deductions, and how many years of building deductions are left.

The figures today

The average new owner-occupier home loan was $842,000 in NSW and $664,000 in Victoria in the June quarter 2026, from the ABS. A two-bedroom unit on a new lease in NSW rents for a typical $785 a week.

House prices and loan sizesRents by postcode

Worked examples

5-Year-Old Apartment

Apartment completed in 2021 with a construction cost of $350,000, bought second-hand. The owner has since installed $8,000 of new blinds and appliances with an average effective life of 10 years.

Original construction cost
$350,000
Year construction was completed
2,021
Your structural renovation cost
$0
Claimable plant & equipment
$8,000
Average effective life (years)
10

Capital works: $8,750 a year (2.5% of $350,000) for the 35 years left. The new assets give $1,600 in year 1 (20% of $8,000), falling each year. Year 1 total: $10,350. Second-hand assets that came with the apartment can't be claimed.

Questions people ask

Can I claim depreciation on an older property?
Capital works deductions run for 40 years from completion, so a building finished in 1995 has claims until about 2035. Buildings started before 16 September 1987 have no building deductions left, but structural work done later can have its own capital works deductions, and new assets you install can be claimed.
Why can't I claim the appliances that came with the property?
Since 9 May 2017, individual investors can't claim decline in value on second-hand depreciating assets in residential rental property. The rule doesn't apply to new properties no one has lived in that are bought within 6 months of being built, to some owners such as businesses letting rental properties, or to assets you buy new.

The terms, in plain English

Division 43 (Capital Works)
Deductions for the cost of constructing the building and structural improvements, generally 2.5% a year for 40 years for residential construction started after 15 September 1987.
Division 40 (Plant & Equipment)
Deductions for the decline in value of removable assets such as appliances, carpets, blinds and hot water systems, over each asset's effective life.
Diminishing Value Method
A way of working out decline in value where each year's deduction is a fixed share (200% ÷ effective life) of the asset's remaining value, so deductions are largest early on.
Quantity Surveyor
A construction cost specialist who prepares tax depreciation schedules for rental properties, including estimates of construction costs when the original cost is unknown.

Official sources

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