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Capital works deduction (Division 43)

The building write-off is the largest, most dependable part of most depreciation claims — and it applies to old and new properties alike. Here's how it works.

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Division 43

Capital works: the deduction hiding in your building

Capital works — also called the building write-off or building allowance — is usually the largest and most reliable part of a depreciation claim. It covers the structural, fixed and irremovable elements of your investment property.

Unlike plant & equipment, capital works isn't affected by the 2017 second-hand rules, so it can be claimed on established properties as well as new builds. A qualified quantity surveyor estimates the original construction cost where records don't exist.

Building structure eligible for the Division 43 capital works deduction
Common questions

Division 43 explained

What is the capital works deduction (Division 43)?

The capital works deduction, set out in Division 43 of the ITAA 1997, lets you claim the decline in value of the structural and fixed elements of an income-producing building — the concrete, brickwork, roofing, and permanently fixed items.

What rate is Division 43 claimed at?

Most residential buildings where construction began after 15 September 1987 are claimed at 2.5% of the original construction cost per year for 40 years. Some structures and time periods use 4%.

Does my property qualify for capital works?

If residential construction commenced after 15 September 1987 (or for many commercial structures, after 20 July 1982), the original building qualifies. Even older properties often qualify on later renovations.

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