Property Depreciation Estimator Australia 2026

How Property Depreciation Works in Australia

Property depreciation allows investors to claim a tax deduction for the natural wear and tear on their investment property over time. The Australian Taxation Office (ATO) splits these deductions into two categories:

Division 43: Building and Structural Works

Division 43 covers the building itself, including walls, roof, foundations, and any structural improvements. For properties built after 15 September 1987, the construction cost can be depreciated at a flat rate of 2.5% per year over 40 years. This means a building with $300,000 in construction costs generates a $7,500 annual deduction.

Division 40: Plant and Equipment

Division 40 covers removable or mechanical items within the property, such as carpets, blinds, appliances, hot water systems, air conditioning units, and smoke alarms. Each item has an effective life set by the ATO and is depreciated individually using either the diminishing value method (which front-loads deductions) or the prime cost method (equal amounts each year). Newer properties typically have more high-value plant items, resulting in larger first-year claims.

Sample Depreciation Schedule

Here is a worked example for a $650,000 house that is 5 years old, with an estimated building value of $260,000 and typical plant and equipment items.

This example uses the diminishing value method for Division 40 items with a 15% annual decline rate. Actual figures will vary based on the specific items in your property.

When to Get a Full Depreciation Schedule

While this estimator gives you a useful ballpark figure, a full depreciation schedule prepared by a qualified quantity surveyor is essential for maximising your claims. A surveyor will physically inspect the property (or use construction cost databases for newer builds) and itemise every claimable component.

A professional depreciation schedule typically costs between $600 and $800 and is 100% tax-deductible. Most schedules cover the full 40-year life of the building and pay for themselves many times over through the additional deductions identified. We recommend getting a schedule as soon as you settle on an investment property.

For a deeper guide on how depreciation works and when it makes sense, read our article on property depreciation schedules in Australia.

Learn More

• Property Depreciation Schedule Australia - everything you need to know about claiming depreciation.
• Rental Yield Calculator - calculate gross and net rental yield for any property.
• Stamp Duty Calculator - estimate stamp duty costs across all Australian states.