Investment Property Tax Depreciation Calculator

Depreciation is one of the largest deductions available to property investors, and one of the easiest to leave on the table. Our Tax Depreciation Calculator, powered by MCG Quantity Surveyors, gives you a fast estimate of the deductions you may be able to claim on a residential, commercial or manufacturing investment property, based on the property’s construction type, quality of finish, age and floor area.

This tool produces an estimate only. A real depreciation schedule requires a site inspection by a qualified quantity surveyor and takes into account the specific details of your property, this calculator is a starting point to help you decide whether commissioning a full schedule is worthwhile.

1. Choose your property type, residential, commercial or manufacturing.
2. Select the construction type and quality of finish that best matches your property.
3. Enter the estimated year of construction. This matters because it determines which depreciation rules apply to the building’s structure (see Division 43, below).
4. Enter the floor area of the property.
5. Enter the year of purchase and the state the property is in, since depreciation rates and some deduction rules interact with when you acquired the property.

The calculator then returns an estimated range of deductions to give you a sense of what a full schedule might uncover.

Many investors underclaim depreciation simply because they never commission a schedule, or assume an older property isn’t worth assessing. Quantity surveying firm MCG Quantity Surveyors reports that up to 80% of property investors still fail to take full advantage of the depreciation deductions available to them (MCG Tax Depreciation). Depreciation is typically the second-largest deduction available to property investors after loan interest, worth checking on every property you hold, not just new ones.

Tax depreciation lets property investors claim a deduction for the wear and tear on a building and its fixtures over time. It’s split into two categories under Australian tax law:

Division 40, Plant and Equipment

Covers easily removable assets within the property, things like carpets, blinds, hot water systems, air conditioning units, cooktops and garage door motors. Each asset has its own effective life set by the ATO, and can be depreciated using either the diminishing value or prime cost method.

Important: since legislative changes effective 9 May 2017, investors who purchase an established (second-hand) residential property generally cannot claim Division 40 depreciation on plant and equipment that was already installed by a previous owner, this mainly affects investors who buy an existing tenanted or previously-owner-occupied home rather than a new or near-new build.

Division 43, Capital Works

Covers the structural building itself, the concrete slab, brickwork, roofing, and fixed structural elements. For most residential buildings where construction started after 15 September 1987, capital works are deductible at a flat 2.5% per year over 40 years from the completion date (consistent with ATO Division 43 rules). Unlike Division 40, Division 43 is unaffected by the 2017 second-hand asset changes, it applies regardless of who built the property, as long as the construction date qualifies.

A full schedule prepared by a quantity surveyor typically includes:
• A comprehensive list of depreciable plant and equipment items, with their effective life and depreciation method
• A capital works (Division 43) schedule projecting the building allowance over up to 40 years
• Both diminishing value and prime cost projections, so your accountant can apply whichever method suits your tax position
• Low-value pooling calculations for eligible items

A depreciation schedule needs to be prepared by one of the professions the ATO recognises for this purpose, most commonly a qualified quantity surveyor. Quantity surveyors are qualified to estimate construction costs for tax purposes even where the original build cost isn’t known, which is common for established properties bought well after they were built.

• Property age. Older properties (especially pre-1987 builds) have limited or no capital works deduction, but may still hold valuable plant and equipment items worth assessing.
• Renovation history. Previous renovations, including by a former owner, can add depreciable value even in an older building.
• The provider’s inspection standard. Look for a firm that conducts (or arranges) a physical site inspection rather than a desktop estimate, and confirm they’re an ATO-recognised quantity surveyor.
• The fee. A depreciation schedule prepared by a quantity surveyor is itself a tax-deductible expense.

Pass it straight to your accountant or tax agent. The schedule doesn’t lodge anything with the ATO itself, it’s the supporting evidence your accountant uses to claim the deductions correctly against the right financial year and method.

Ideally, before 30 June, so the deductions land in that financial year’s return. If you’ve held a property for a while without a schedule, it’s not too late, the ATO generally allows individuals to amend a return to claim missed deductions for up to two financial years after the original assessment.

Worth remembering while you wait: items costing $300 or less can be claimed as an immediate deduction in the year incurred, and assets valued under $1,000 can be grouped into a low-value pool and depreciated at a flat rate, both current under ATO guidance as of 2026 (ATO, Depreciating assets in rental properties).

The figures below are a simplified, illustrative example only, not a real MCG Quantity Surveyors output. An actual schedule requires a physical property inspection and will differ from this example.

Consider an investor who buys a four-bedroom brick veneer house, built in 2016 (220 sqm), as a near-new investment property in 2026. Say the estimated construction cost of the building (excluding land) is around $320,000, if you’re pricing a new build or renovation yourself, our Residential Building Cost Calculator can help you estimate a figure like this.

• Division 43 (capital works): $320,000 × 2.5% ≈ $8,000 in year one, and every year after, until the 40-year effective life from construction is used up (in this example, through to around 2056).
• Division 40 (plant and equipment): using the diminishing value method, a near-new property’s carpets, blinds, hot water system, cooktop, air conditioning and similar items might generate roughly $3,500–$4,500 in combined year-one deductions, tapering in later years as each asset’s written-down value declines.

Illustrative year-one total: roughly $11,500–$12,500 in combined deductions, before accounting for the investor’s individual marginal tax rate, which determines the actual cash benefit.

This is a simplified example to show how the two deduction types interact. A real schedule depends on the property’s actual finishes, age, any renovation history, and a physical inspection, run the calculator above, or speak to a quantity surveyor, for numbers specific to your property.

• Reduces taxable income each year, with no additional cash outlay
• Uncovers deductions many investors don’t realise they can claim, particularly on older or renovated properties
• Provides documentation your accountant can rely on and the ATO recognises
• A one-off cost that can apply for the life of the schedule (up to 40 years for capital works)

Claiming depreciation reduces your property’s cost base for capital gains tax (CGT) purposes when you eventually sell, broadly, the capital works deductions claimed over time are subtracted from the cost base, which can increase the calculated capital gain on sale. This doesn’t make depreciation not worth claiming: the tax benefit is realised progressively each year you hold the property, while the CGT effect only applies if and when you sell. Speak to your accountant about how this interacts with your circumstances, and run the numbers on a potential sale with our Capital Gains Tax Calculator.

What is the Tax Depreciation Calculator and how does it work? It’s a free estimation tool, powered by MCG Quantity Surveyors, that gives you an indicative depreciation range based on your property’s type, construction details, age and floor area.

What makes the underlying data helpful? The estimates draw on MCG’s experience preparing depreciation schedules across a wide range of Australian property types, a more grounded starting point than a generic calculator.

What’s distinct about this calculator compared to others? It’s built around the ATO-recognised categories (Division 40 and Division 43) rather than a flat percentage guess, and it’s backed by a practising quantity surveying firm.

How accurate is the estimate? It’s a planning estimate, not a substitute for a full schedule. Actual deductions depend on a physical inspection and the specific fixtures, finishes and history of your property.

Are any properties excluded, for example, renovated or furnished ones? The calculator is designed for standard property assessments. Properties with significant renovation history or unusual furnishing arrangements may need a full inspection-based schedule to capture their depreciable value accurately, since these details aren’t captured by the calculator’s inputs.

Is there a fee to use the calculator? No, the estimate is free to generate.

Will it estimate my actual tax return outcome? No, it estimates depreciation deductions only. Your actual tax outcome depends on your marginal tax rate, other deductions and your overall position, which your accountant can calculate.

What if nothing happens when I click calculate? Check that all required fields are completed, property type, construction details, floor area and purchase year, then try again.

What if the numbers look wrong for my property? The calculator estimates from general data for the inputs provided. If your property has unusual features, extensive renovations, or an uncertain construction date, a full inspection-based schedule will give you an accurate figure.

How is the property’s age identified? From the estimated year of construction you enter, also the key input for Division 43 eligibility, since only buildings started after 15 September 1987 qualify for the standard capital works deduction.

Can I claim depreciation on a second-hand established property? Yes, but with a limit: since the 9 May 2017 legislative changes, Division 40 deductions on an established residential property are generally restricted to plant and equipment items you purchase new yourself after settlement, not a previous owner’s existing items. Division 43 capital works deductions are unaffected and remain available based on the building’s construction date.

Do I need a new schedule after renovating my property? Generally yes. A renovation, even one carried out by a previous owner, can add depreciable value an existing schedule won’t capture, so it’s worth having it reviewed after any significant renovation.

• Capital Gains Tax Calculator, to see how depreciation claimed over time affects your CGT position on sale.
• Investment Property Cash Flow Calculator, to see how depreciation deductions flow through to your property’s overall cash flow.
• Residential Building Cost Calculator, to estimate construction costs if you’re assessing a new build or renovation as an investment.
• Stamp Duty Calculator, for budgeting the other acquisition costs around a property purchase.