Property Depreciation Calculator 2025-26
Calculate the declining value of your assets over time.
Estimate your investment property depreciation deductions for 2025-26. Shows Division 43 building allowance (2.5%/yr) and Division 40 plant and equipment. See your tax saving at your marginal rate.
Estimates only. Get a quantity surveyor's depreciation schedule for ATO-compliant claims.
How investment property depreciation works in Australia
Two divisions of depreciation
Division 43 (building allowance at 2.5%/yr) and Division 40 (plant and equipment at ATO effective life rates) reduce taxable income each year at no extra cash cost. On a new $600,000 property, Year 1 depreciation can exceed $15,000.
2.5% per year for 40 years on construction cost
2.5% of construction cost
Div 43 deducts 2.5% of the original building construction cost each year for 40 years. Only the building cost (not land) is eligible. Construction must have commenced after 15 September 1987.
| Build cost | Div 43/yr | Tax saving @ 37% |
|---|---|---|
| $200,000 | $5,000 | $1,850/yr |
| $350,000 | $8,750 | $3,238/yr |
| $500,000 | $12,500 | $4,625/yr |
Depreciation on individual depreciating assets
Individual items at ATO effective life rates
Div 40 covers carpet, blinds, dishwasher, hot water systems, air conditioning, ovens, etc. New properties: all qualifying items claimable. Second-hand properties acquired after 7 May 2017: generally limited to new assets you install (2017 law change).
Diminishing value method
Front-loads deductions to early years by applying a fixed percentage to the diminishing book value. Usually more beneficial than prime cost (straight line) in early years.
Why a QS schedule is required for property depreciation
ATO requires a QS schedule
You cannot self-estimate construction costs or plant and equipment values for tax purposes. A registered quantity surveyor prepares the schedule once, listing every qualifying item, its effective life, and annual deduction amount.
Cost and payback
A QS schedule costs $500–$800 (fully tax-deductible). On a new $600,000 property with $15,000+ Year 1 depreciation, the schedule cost pays for itself 20× over in year one.
❓ Frequently asked Frequently asked questions
How much depreciation can I claim on an investment property?
Year 1 depreciation typically ranges from $5,000–$20,000+ depending on value, age, and construction cost. New $600,000 property: ~$9,750/yr (Div 43) + ~$7,200 (Div 40 Year 1) = ~$16,950 total Year 1 deduction.
Can I depreciate an older property?
Div 43 requires construction after 15 September 1987. Pre-1987 buildings are ineligible for Div 43 (but post-1987 renovations can be depreciated). Div 40 can be claimed on new assets you install in any property.
Does depreciation reduce the CGT cost base?
Yes. Div 43 and Div 40 deductions claimed reduce the cost base, increasing your capital gain on eventual sale. This is an important long-term consideration.
Do I need a QS schedule every year?
No. The QS prepares the schedule once, covering the full 40-year Div 43 life and all Div 40 items. You use it for your annual tax return. Update required only if you make capital improvements.
Where these figures come from
Property and mortgage figures on this page are drawn from the Reserve Bank of Australia (rate data), APRA (serviceability and lending rules), the ATO (CGT and rental rules), and State Revenue Offices (stamp duty).
- Mortgage & variable-rate data — RBA — Lenders' Interest Rates (F6).
- Lending serviceability buffer (3%) — APRA — Prudential Practice Guide APG 223.
- Capital gains tax & main residence — ATO — Capital gains tax.
- Negative gearing & rental income — ATO — Rental properties.
- Stamp duty (NSW example) — Revenue NSW — Transfer duty.
- First Home Owner Grant schemes — FirstHome.gov.au.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
Your result reflects the financial position of the property scenario you entered — based on current rates, market rules, and standard calculation methods used across the Australian property industry.
Use this as a planning figure. Compare different property prices, deposit sizes, or loan terms to see how each changes the outcome. Adjust inputs in Standard or Advanced mode for more detail.
Not a bank approval, valuation, or guarantee. Lenders apply their own policies, credit checks, and property assessments beyond what any calculator can model.
Calculations use current published rates and standard formulas. All processing runs in your browser — no data is sent to any server.
Property calculations are most sensitive to the interest rate, loan amount, and time horizon. Small changes to these inputs produce the largest shifts in your result.
A 0.5% rate change on a $500k loan shifts annual interest by ~$2,500. Use Standard mode to compare fixed vs variable rate scenarios.
Extending the loan term reduces repayments but increases total interest. Interest-only periods change cash flow but not total cost. Model both in Advanced mode.
The ratio of your loan to the property value affects LMI, rate pricing, and lender appetite. Crossing the 80% LVR threshold changes the cost structure significantly.
To improve your property outcome, focus on the inputs with the highest leverage — these typically produce more impact per dollar than broad changes.
A larger deposit reduces LVR, eliminates LMI at 80%, and may unlock better rate pricing. Even $10k–$20k extra deposit can shift the cost picture.
Credit card limits and personal loans reduce borrowing capacity dollar-for-dollar. Closing unused cards before applying is one of the fastest levers.
Rate, policy, and LVR treatment vary between lenders. A mortgage broker can identify the best fit for your specific profile and property type.
Property decisions involve multiple linked calculations. Use the related calculators to model the full picture before committing.
Confirm how much a lender would approve based on your income, debts, and expenses.
Borrowing capacity →Factor in transfer duty and other upfront costs so your total cash requirement is accurate.
Stamp duty calculator →See the monthly, fortnightly, and weekly repayment at different rates and terms.
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