Depreciation Schedule Builder
Residential Rental Property➕ Add Depreciating Asset
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Need your Tax Return prepared or your Depreciation Schedule audited?
Ensure you claim both Division 40 Plant & Equipment and Division 43 Capital Works (2.5% p.a. on the building).
Australian Tax Depreciation Guide: Division 40 vs Division 43
1. Division 40 (Capital Allowances / Plant & Equipment)
Applies to removable, mechanical, or electrical items within a property (e.g., carpets, dishwashers, air conditioners, hot water units). These assets decline in value based on statutory effective lives determined by the ATO Commissioner and can be calculated using Diminishing Value or Prime Cost.
2. Division 43 (Capital Works / Building Allowance)
Applies to the permanent structural construction of the building itself (e.g., concrete slabs, brickwork, framing, roof, built-in cabinetry). For residential properties commenced after 15 September 1987, you can claim a flat 2.5% per year over 40 years of the original construction cost.
3. 2017 Second-Hand Residential Property Rule
Under legislation enacted in 2017, investors purchasing residential properties after 7:30 PM on 9 May 2017 cannot claim Division 40 depreciation on second-hand plant & equipment previously used by someone else. However, you can still claim 100% of Division 43 Capital Works and any brand-new assets you install yourself!
4. Immediate Deduction & Low-Value Pooling
• Immediate $300 Deduction: For rental properties, assets costing $300 or less that are not part of a set can be written off in full immediately.
• Low-Value Pool: Assets with an initial cost or written-down value under $1,000 can be pooled and depreciated at an accelerated rate (18.75% in year 1, 37.5% thereafter).
