Property Depreciation Calculator 2026-27
Calculate the declining value of your assets over time.
Estimate your investment property depreciation deductions for 2026-27. Shows Capital Allowances building allowance (2.5%/year) and Annual Investment Allowance plant and equipment. See your tax saving at your marginal rate.
Estimates only. Get a capital allowances surveyor's depreciation schedule for HMRC-compliant claims.
How investment property depreciation works in the United Kingdom
Two divisions of depreciation
Capital Allowances (building allowance at 2.5%/year) and Annual Investment Allowance (plant and equipment at HMRC 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.
based on asset class and writing-down allowance for 40 years on construction cost
2.5% of construction cost
Capital Allowances 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 | Capital Allowances/year | Tax saving @ 37% |
|---|---|---|
| £200,000 | £5,000 | £1,850/year |
| £350,000 | £8,750 | £3,238/year |
| £500,000 | £12,500 | £4,625/year |
Depreciation on individual depreciating assets
Individual items at HMRC effective life rates
AIA 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
HMRC requires a QS schedule
You cannot self-estimate construction costs or plant and equipment values for tax purposes. A registered capital allowances 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/year (Capital Allowances) + £7,200 (AIA Year 1) = £16,950 total Year 1 deduction.
Can I depreciate an older property?
Capital Allowances requires construction after 15 September 1987. Pre-1987 buildings are ineligible for Capital Allowances (but post-1987 renovations can be depreciated). AIA can be claimed on new assets you install in any property.
Does depreciation reduce the CGT base cost?
Yes. Capital Allowances and AIA deductions claimed reduce the base cost, 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 Capital Allowances life and all AIA 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 HMRC (Stamp Duty Land Tax), The Bank of England (mortgage-rate data), The FCA (mortgage conduct rules), and HM Land Registry (house-price data).
- Stamp Duty Land Tax (SDLT) rates — GOV.UK — Stamp Duty Land Tax.
- UK mortgage rate & lending data — Bank of England — Mortgage lending statistics.
- FCA mortgage conduct rules — FCA — Mortgages.
- UK House Price Index — GOV.UK — UK House Price Index.
- Rental income & Section 24 mortgage interest relief — GOV.UK — Rental income and tax.
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.
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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.
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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 pound-for-pound. 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.
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