Depreciation Calculator Australia (Div 40 & Div 43)
Calculate tax depreciation deductions for Australian investment properties and business assets. Generate year-by-year schedules using Division 40 (plant & equipment) or Division 43 (capital works) methods.
Based on 2025-26 ATO depreciation rules. Supports diminishing value and prime cost methods.
Original construction cost (not purchase price of land + building)
Year construction was completed (determines rate)
Residential: 2.5% | Non-residential (post-1992): 4%
Number of years to show (1-40)
Percentage used for private purposes (0 = fully deductible)
To calculate estimated tax savings at your marginal rate
Enter building details to calculate depreciation schedule
Division 43 vs Division 40: What's the Difference?
Australian tax law splits depreciation into two divisions based on the type of asset:
| Feature | Division 43 (Capital Works) | Division 40 (Plant & Equipment) |
|---|---|---|
| What it covers | Building structure (walls, roof, foundations, fixed improvements) | Removable assets (appliances, carpets, blinds, air conditioning units) |
| Method | Straight-line only | Diminishing value OR prime cost |
| Rate | 2.5% residential / 4% non-residential | Based on effective life of each asset |
| Second-hand property | Can claim on remaining life | Cannot claim on existing items in second-hand residential (from 1 July 2017) |
| Professional report | Quantity surveyor schedule required | Can self-assess using ATO tables, but QS recommended |
Diminishing Value vs Prime Cost
For Division 40 assets, you can choose between two depreciation methods. Once chosen, you cannot switch methods for that asset.
Diminishing Value Method
Rate = 200% / Effective Life
Annual deduction = Opening Written Down Value x Rate
Example: $10,000 asset, 5-year life: Rate = 40%. Year 1: $4,000, Year 2: $2,400, Year 3: $1,440...
Diminishing value gives larger deductions in the early years and smaller ones later. It never fully reaches zero, but the remaining value becomes negligible over time.
Prime Cost Method
Rate = 100% / Effective Life
Annual deduction = Original Cost x Rate (constant each year)
Example: $10,000 asset, 5-year life: Rate = 20%. Each year: $2,000 for 5 years.
Prime cost gives equal deductions each year. The asset is fully written off at the end of its effective life.
First-year pro-rata: In the first income year you hold an asset, the deduction is pro-rated based on the number of days you held it. For example, if you purchase an asset on 1 January, you can only claim approximately half a year's depreciation in that financial year. This calculator shows full-year amounts — adjust your first year accordingly.
Common Effective Lives (ATO Determinations)
The ATO publishes effective life determinations for most assets. Here are some common ones for investment properties and businesses:
| Asset | Effective Life | DV Rate | PC Rate |
|---|---|---|---|
| Laptop / desktop computer | 4 years | 50% | 25% |
| Furniture (desks, chairs) | 10 years | 20% | 10% |
| Air conditioning units | 10 years | 20% | 10% |
| Carpets | 8 years | 25% | 12.5% |
| Hot water system | 12 years | 16.67% | 8.33% |
| Washing machine / dryer | 7 years | 28.57% | 14.29% |
| Blinds and curtains | 8 years | 25% | 12.5% |
| Fridge | 10 years | 20% | 10% |
| Oven / cooktop | 12 years | 16.67% | 8.33% |
| Motor vehicle | 8 years | 25% | 12.5% |
Tip: You can choose to self-assess a shorter effective life if you can demonstrate the asset will be used in a way that wears it out faster. See ATO effective life tables for the complete list.
Who Can Claim Depreciation?
You can claim depreciation deductions if:
- Investment property owners: Claim both Div 43 (building) and Div 40 (fixtures and fittings) deductions against rental income
- Business owners: Claim depreciation on business assets (equipment, vehicles, computers, furniture)
- Self-employed and sole traders: Claim on assets used for producing assessable income
- Work-from-home: Claim depreciation on home office equipment (computer, desk, chair) used for work
If an asset is used partly for private purposes, you can only claim the business-use percentage. For example, a laptop used 60% for work and 40% for personal use can only depreciate 60% of its cost.
Low-Value Pool
Assets costing less than $1,000, or those that have been written down below $1,000 using the diminishing value method, can be placed in a low-value pool:
- First year: 37.5% depreciation
- Subsequent years: 75% of the opening pool balance
- Simplifies record-keeping for many small items
- Cannot remove items once added to the pool
Instant Asset Write-Off
Small businesses with turnover under $10 million can instantly deduct the full cost of eligible assets costing less than $20,000 (for the 2024-25 year; check ATO for current thresholds). Assets above this threshold are added to a small business simplified depreciation pool.
Important: Instant asset write-off thresholds change frequently. Always check the current ATO thresholds before claiming.
FAQ
What is the difference between Division 40 and Division 43 depreciation?
Division 43 covers capital works deductions for the building structure itself (walls, roof, foundations). The rate is 2.5% for residential buildings completed after September 1987, or 4% for non-residential buildings completed after 1992. Division 40 covers plant and equipment -- removable assets like appliances, carpets, and blinds. Div 40 assets can use either diminishing value or prime cost methods.
Should I use diminishing value or prime cost depreciation?
Diminishing value (200% / effective life) gives larger deductions in the early years, which is beneficial if you want to maximise tax deductions sooner. Prime cost (100% / effective life) gives equal deductions each year. Most investors choose diminishing value for the earlier tax benefit, but prime cost can be simpler for budgeting.
What is the depreciation rate for a residential investment property?
For the building structure (Division 43), residential properties completed after September 1987 are depreciated at 2.5% per year on the original construction cost. This means a $400,000 building is fully depreciated over 40 years ($10,000 per year). Plant and equipment items within the property have varying effective lives determined by the ATO.
Can I claim depreciation on a second-hand property?
For Division 43 (building), yes -- you can claim capital works deductions on the remaining depreciable life regardless of when you purchased it, as long as the building was constructed after 1985. For Division 40 (plant & equipment), from 1 July 2017, investors who purchase second-hand residential properties can only claim Div 40 depreciation on new assets they install themselves, not existing ones.
What is the low-value pool threshold?
Assets costing less than $1,000, and assets written down below $1,000 using the diminishing value method, can be placed in a low-value pool. The pool is depreciated at 37.5% in the first year and 75% in subsequent years. This simplifies record-keeping for small items.
Do I need a depreciation schedule from a quantity surveyor?
For investment property claims, the ATO requires a depreciation schedule (tax depreciation report) prepared by a qualified quantity surveyor for capital works (Div 43) claims. The cost of the report is tax-deductible. For individual plant and equipment assets, you can self-assess using ATO effective life tables, but a professional schedule is recommended to ensure you claim all eligible deductions.
Disclaimer
This calculator provides estimates only and does not constitute financial or tax advice. Depreciation schedules can be complex and actual deductions may vary based on the date of acquisition, first-year pro-rata adjustments, immediate write-off concessions, and changes to asset use.
For investment property claims, a professional depreciation schedule from a qualified quantity surveyor is strongly recommended. Consult a registered tax agent for advice specific to your situation.
Tax Accuracy & Sources
This calculator is an estimate tool and may not cover all personal circumstances. For state-based taxes, confirm details with your state or territory revenue office.
Uses 2025-26 ATO rates.