Depreciation · Calculator

Depreciation Calculator Australia (Div 40 & Div 43)

Calculate 2025-26 or 2026-27 depreciation schedules for Australian investment property and business assets, including first-year days and remaining Division 43 life.

Uses ATO days-held formulas and selected-year income tax rules. A formal schedule may still be needed to establish construction expenditure and eligibility.

01INPUTS

Sets the first schedule year and the tax rules used for the optional saving estimate.

Original construction cost (not purchase price of land + building)

When completed capital works first became income-producing. Use the date on your QS schedule where available.

The rate depends on construction-start date and use—not simply “residential vs commercial”. Confirm 4% eligibility from your schedule.

The ATO apportions the first-year deduction by eligible days over 365. Use acquisition/availability date for an existing rental building.

Number of years to show (1-40)

Percentage used for private purposes (0 = fully deductible)

Shows the income tax and Medicare reduction using 2025-26 rules. HELP and MLS effects are excluded.

Edit inputs ↑
Division 43 vs Division 40: What's the difference?
FeatureDivision 43 (Capital Works)Division 40 (Plant & Equipment)
What it coversBuilding structure (walls, roof, foundations)Removable assets (appliances, carpets, blinds)
MethodStraight-line onlyDiminishing value OR prime cost
RateUsually 2.5%; 4% only where construction-period and use tests are metBased on effective life of each asset
Second-hand propertyCan claim on remaining lifeCannot claim existing items (from 1 Jul 2017)
EvidenceActual construction costs, or an independent qualified estimate where costs cannot be determinedCost, start date, taxable-use records and effective life
Capital works deduction by build cost

Division 43 deduction by construction cost

The annual capital works deduction is a percentage of qualifying construction expenditure: commonly 2.5% over a maximum 40 years, or 4% over 25 years where the relevant construction-period and use tests are met. Existing buildings only have the balance of that period remaining.

Construction costGeneral 2.5% full yearEligible 4% full year
$200,000 $5,000$8,000
$300,000 $7,500$12,000
$400,000 $10,000$16,000
$500,000 $12,500$20,000
$750,000 $18,750$30,000

Full-year illustration only. Apply the rate shown on the capital works schedule and limit the claim to eligible days and remaining undeducted construction expenditure.

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 = Base value × days held ÷ 365 × 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 × days held ÷ 365 × rate

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 is included: enter the date the asset was first used or installed ready for use. The schedule applies the ATO's days-held ÷ 365 formula; the numerator can be 366 in a leap year.

Common effective lives (ATO determinations)
AssetEffective LifeDV RatePC Rate
Laptop / desktop computer4 years50%25%
Furniture (desks, chairs)10 years20%10%
Air conditioning units10 years20%10%
Carpets8 years25%12.5%
Hot water system12 years16.67%8.33%
Washing machine / dryer7 years28.57%14.29%
Blinds and curtains8 years25%12.5%
Fridge10 years20%10%
Oven / cooktop12 years16.67%8.33%
Motor vehicle8 years25%12.5%

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?
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 & instant asset write-off

Assets costing less than $1,000, or those written down below $1,000, can be placed in a low-value pool: 18.75% in the first year (the year you allocate the asset), then 37.5% of the opening pool balance each year after. Once added, items cannot be removed.

For 2026-27, eligible small businesses with aggregated turnover under $10,000,000 may immediately deduct eligible assets costing less than $20,000 under the simplified depreciation rules. Check eligibility before using general Div 40 instead.

Use our dedicated IAWO calculator →
2026-27 rates & effective lives

The car depreciation cost limit is $69,883 for 2026-27. Effective life depends on the asset description and when it was first used; confirm the current Commissioner's determination rather than relying only on a generic category.

Read the ATO depreciation rates 2026-27 guide →
FAQ
What is the difference between Division 40 and Division 43 depreciation?
Division 43 covers qualifying construction expenditure for the building and structural improvements. The common rate is 2.5%; 4% applies only to specified construction periods and qualifying uses. Division 40 covers separate depreciating assets such as eligible appliances. Div 40 assets can generally use diminishing value or prime cost, subject to exceptions.
Should I use diminishing value or prime cost depreciation?
Diminishing value uses 200% divided by effective life for assets first held on or after 10 May 2006 and generally brings deductions forward. Prime cost uses 100% divided by effective life and spreads decline more evenly. Both formulas are apportioned by days held over 365 in the first year, and the chosen method generally cannot later be changed for that asset.
What is the depreciation rate for a residential investment property?
The common Division 43 rate for residential capital works is 2.5% of qualifying construction expenditure over a maximum 40-year period. A $400,000 construction-expenditure base produces up to $10,000 for a full eligible year, but an existing building only has its remaining period and first/last years are apportioned.
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. 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.
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. Assets allocated during the year are depreciated at 18.75% in that first year, then 37.5% per year on the pool balance after that. This simplifies record-keeping for small items.
Do I need a depreciation schedule from a quantity surveyor?
Capital works deductions must use actual construction costs. If those costs cannot genuinely be determined, the ATO accepts an estimate from a quantity surveyor or another independent qualified person, and the cost of obtaining that estimate is generally deductible as a tax-related expense. Keep the report because it also establishes the deduction start date, rate and remaining construction expenditure.
How much depreciation can I claim on a $400,000 investment property?
On a residential building with a $400,000 qualifying construction-expenditure base, a 2.5% rate gives up to $10,000 for a full eligible year. The actual current claim can be lower because the 40-year period may already be partly used, the property may only be income-producing for part of the year, or private use may apply.
How does claiming depreciation affect capital gains tax when I sell?
Capital works deductions you claimed—or in some circumstances could still claim—may have to be excluded from the property's cost base or reduced cost base. The precise adjustment depends on acquisition and expenditure dates, so retain the depreciation schedule for the eventual CGT calculation.

Tax Accuracy & Sources

Reviewed: March 2026 · Tax year: 2026-27

Generates indicative 2025-26/2026-27 schedules for Division 40 and Division 43. It applies days-held apportionment, remaining capital-works expenditure, private-use adjustment and selected-year income tax plus Medicare effects. It does not model pooling, balancing adjustments, GST, HELP, MLS or all eligibility exceptions.