Building and fittings write-off
Property depreciation calculator.
Depreciation is a yearly tax deduction for the building and its fittings wearing out over time. Estimate yours here from the editable example, then get a quantity surveyor's schedule for the figures your accountant will use.
First-year deduction
$7,023
Capital works plus fittings for the part of the first financial year you hold the property.
Tax value
$2,739
What the deductions may be worth in tax at your income, assuming each dollar reduces your tax in the year it is claimed. The card shows the first year.
Deductions over 10 years
$90,733
Capital works and fittings added up over the period.
Tax value over 10 years
$35,386
The tax value of each year's deductions, added up.
On these assumptions the first year's deductions come to about $7,023, which may be worth about $2,739 in tax, and about $90,733 over 10 years.
Capital works
| Rate | 2.5% a year |
|---|---|
| A full year | $8,750 |
| Your first year | $5,801 |
| Years of claims left | 24.1 |
| Last day of claims | 20 November 2050 |
Fittings
| Split system air conditioner | $318 |
|---|---|
| Carpet | $663 |
| Hot water system, electric | $0 |
| Smoke alarm | $240 |
| Fittings, first year | $1,221 |
Year by year
| Year | Capital works | Fittings | Total | Tax value |
|---|---|---|---|---|
| 2026-27 | $5,801 | $1,221 | $7,023 | $2,739 |
| 2027-28 | $8,774 | $1,251 | $10,025 | $3,910 |
| 2028-29 | $8,750 | $959 | $9,709 | $3,786 |
| 2029-30 | $8,750 | $736 | $9,486 | $3,699 |
| 2030-31 | $8,750 | $565 | $9,315 | $3,633 |
| 2031-32 | $8,774 | $434 | $9,208 | $3,591 |
| 2032-33 | $8,750 | $334 | $9,084 | $3,543 |
| 2033-34 | $8,750 | $258 | $9,008 | $3,513 |
| 2034-35 | $8,750 | $199 | $8,949 | $3,490 |
| 2035-36 | $8,774 | $153 | $8,927 | $3,482 |
Sources
- ATO legal database: LI 2025/20, Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025, Schedule 2 Table A, Residential property operators (67110)
- Federal Register of Legislation: F2025L01097 (registered 15 September 2025, in force, no amendments)
- ATO: Effective life determinations, rulings and law (current determination is LI 2025/20)
- ATO: TR 2022/1 Notice of Withdrawal (withdrawn with effect from 31 October 2025)
- ITAA 1997 s 43-25: rate of deduction (4% for works begun 22 Aug 1984 to 15 Sep 1987, else 2.5%)
- ITAA 1997 s 43-30: no deduction until construction is complete
- ITAA 1997 s 43-90: intended use at completion (residential from 18 July 1985)
- ITAA 1997 s 43-210: deduction formula, works begun after 26 February 1992
- ITAA 1997 s 43-215: deduction formula, works begun before 27 February 1992
- ITAA 1997 s 43-220: works begun after 15 September 1987 treated as earlier
- ITAA 1997 s 43-230 and s 43-235: undeducted construction expenditure and use period
- ITAA 1997 s 40-27: second-hand assets in residential premises, with Act No. 126 of 2017 application note
- ITAA 1997 s 40-72: diminishing value, 200% from 10 May 2006
- ITAA 1997 s 40-75: prime cost method
- ITAA 1997 s 40-80: immediate deduction, $300 or less
- ITAA 1997 s 40-95: choice of effective life
- ITAA 1997 s 40-425 and s 40-440: low-value pool
- Income Tax Assessment Act 1997 (Federal Register of Legislation)
- Treasury Laws Amendment (Housing Tax Integrity) Act 2017, Schedule 2 item 13 (application)
- ATO: Work out your capital works deductions (rates table by construction start date)
- ATO: Second-hand depreciating assets (residential rental properties)
- ATO Guide to depreciating assets 2026: working out decline in value
- ATO Guide to depreciating assets 2026: immediate deduction for certain non-business depreciating assets
- ATO Guide to depreciating assets 2026: low-value and software development pools
Rates last checked 25 October 2026.
How it is worked out
- Finds the capital works rate for your construction start date, from the rates in the sources. A home whose construction started before 18 July 1985 has no capital works claim.
- Starts the write-off period on the day construction finished, not the day you bought. You claim only for the days in that period that you own the property and it is rented or available to rent, until the whole construction cost is written off. An older building has fewer years left, and the tool shows how many.
- Counts the days you hold the property in each financial year, so the first year is part of a year from settlement.
- Spreads each fitting over its effective life, the useful life set for it in LI 2025/20. Diminishing value claims 200% divided by the effective life, on what is left each year; prime cost claims the cost divided by the effective life, the same each full year.
- Claims an item costing $300 or less in full in the first year. The tool does not test whether an item was bought as part of a set, or with identical items, that together cost more.
- For an established home, claims existing fittings only if you held the property before 7:30pm AEST on 9 May 2017 and it was rented by 30 June 2017; otherwise it claims only the items you bought new for the rental. Fittings that came with a new home, in the meaning above, are claimable.
- Works out the tax value of each year's deductions as tax on your income without them, less tax with them, at 2026-27 resident rates plus the Medicare levy, with later years held at the latest published rates.
- Adds up the deductions and their tax value over 10 years.
What this tool leaves out
- A quantity surveyor's schedule. This is an estimate; the schedule is the document your accountant claims from.
- Owners the rule on existing fittings does not apply to, such as companies. The tool assumes it applies, as it does to individuals and self-managed super funds (SMSFs).
- The low-value pool, the test for items bought as a set, and renovations by earlier owners.
- Timing. The tool assumes the property is available to rent from settlement and every fitting is in place that day.
- Whether you can use the deduction this year. From 1 July 2027, a net rental loss on an established home acquired at or after 7:30pm AEST on 12 May 2026, which for a purchase means contracted, can no longer reduce tax on your salary or other income, unless an exception applies; it can be used only against residential property income and gains, and the rest carries forward to be used the same way in later years.
- The effect on capital gains tax when you sell, since capital works deductions claimed reduce your cost base.
Questions investors ask
What is the difference between capital works and fittings?
Capital works is the building itself, such as the structure and the roof. Fittings, also called plant and equipment, are items with their own effective life, such as carpet, blinds and appliances. The tool works out each one separately and adds them together.
Why does the construction date matter?
The capital works rate depends on when construction started. The write-off period runs from when it finished, and you claim only for the days you own the property and rent it out, or have it available to rent, until the whole construction cost has been written off. An older building may have only a few years left, or none, and the tool shows the years left and the last day of claims.
Can I claim the fittings in an established home I buy?
Usually not the ones already there. Since 7:30pm AEST on 9 May 2017, existing fittings in an established rental generally cannot be claimed, unless you held the property before then and it was rented by 30 June 2017. Items you buy new for the rental can still be claimed, and your accountant can confirm how the rule applies to you.
Does that rule apply inside an SMSF?
Yes. Self-managed super funds are not among the owners the rule leaves out, so an SMSF buying an established rental generally cannot claim the existing fittings. Companies and some other entities are left out of the rule. Your accountant can confirm the position for your fund.
What is the difference between diminishing value and prime cost?
Both spread the cost of fittings over their effective life. Diminishing value claims more in the early years and less later; prime cost claims the same amount each full year. Which suits your situation is a question for your accountant.
Does depreciation affect tax when I sell?
It can. Capital works deductions claimed come off your cost base, what the property cost you for tax, which raises the capital gain. The capital gains tax calculator shows the effect.
Why is the tax value only an estimate?
It assumes every dollar of deduction reduces tax at your income in the year it is claimed. Rent and other costs also change your income, and from 1 July 2027 a rental loss on some properties cannot be used against your salary, so the real effect may differ.
Where to next
If you are weighing up a purchase, we can factor depreciation into the numbers with you and your accountant.
This calculator gives general information only. Results are estimates based on the figures you enter, the rates and effective lives in the sources and resident tax rates, as at the date the rates were last checked; they are not a depreciation schedule, which a quantity surveyor prepares for your accountant to claim from. It is not tax or financial advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. CHAD Property coordinates with accountants, quantity surveyors and brokers and does not give tax advice, so speak with your accountant before you claim.
The tools on this page give general information only. Each result is an estimate, worked out from the figures you enter and the assumptions shown, using rates and rules as at the date shown. It is not a quote, and it is not intended to be relied on to make a decision about a financial product, a loan or your tax. It is not personal financial, tax, credit or legal advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Rates, thresholds and laws change, and some details of recent changes are not yet final. CHAD Property is a buyer's agency. It does not hold an Australian financial services licence or an Australian credit licence, and it is not a registered tax agent. We do not advise on tax, lending, financial products or how to structure ownership, including through a self-managed super fund, a company or a trust; we work alongside the brokers, accountants and financial planners who do. Before you make a financial decision, consider getting advice from a licensed financial adviser, and check any figure here with a licensed or registered professional who knows your situation.