Rental Property Depreciation: Division 40 vs Division 43
This Oz Tax Online video explains rental property depreciation for Australian investors, breaking down the difference between Division 40 plant and equipment and Division 43 capital works, and how the rules change for new and second-hand properties.
About this video
The video gives Australian investment property owners a clear overview of rental property depreciation and the difference between the two main categories: Division 40 and Division 43.
Division 40 covers plant and equipment assets inside the property that wear out over time, while Division 43 covers capital works for the building structure itself. New properties can usually claim both, while second-hand properties follow different rules.
The video is general information only. Because every property is different, it points to a professional depreciation schedule as the reliable way to confirm what you can claim.
What this video covers
- What rental property depreciation is
- Division 40 plant and equipment (carpets, air conditioners, dishwashers, ovens)
- Division 43 capital works (walls, roof, concrete, garage)
- Claiming both on brand-new investment properties
- How the rules change for second-hand properties
- Why a professional depreciation schedule matters
Detailed video notes
Rental property depreciation lets Australian investors claim the declining value of an investment property over time. It is split into two categories, and understanding the difference between Division 40 and Division 43 can have a real impact on your tax return.
Division 40 covers plant and equipment, the assets inside the property that wear out over time such as carpets, air conditioners, dishwashers and ovens. Division 43 covers capital works, the building structure itself including the walls, the roof, the concrete and even the garage. The two are claimed differently and at different rates.
If you buy a brand-new property, you can usually claim both Division 40 and Division 43, which is often the gold standard for maximising deductions. For second-hand properties the rules change: you generally cannot claim the existing Division 40 assets that came with the house, but you can still claim Division 43 capital works, and any new assets you buy and install yourself are also claimable.
Every property is different, and a professional depreciation schedule prepared by a qualified quantity surveyor is the reliable way to be sure what you can claim. Oz Tax Online can review your rental property situation before lodgement. This video is general information only and is not personal tax advice.
Video transcript
Have you recently purchased an investment property? You need to understand the difference between Division 40 and Division 43. It is a total game-changer for your tax return. Division 40 covers plant and equipment. These are assets inside the property that wear out over time, like carpets, air conditioners, dishwashers and ovens. Division 43 is for capital works. This covers the building structure itself: walls, the roof, concrete and even the garage. If you buy a brand-new property, you can usually claim both. It is the gold standard for maximising your tax deductions. But for second-hand properties, the rules change. You generally cannot claim existing Division 40 assets that came with the house. However, you can still claim Division 43, and any new assets you purchase and install yourself are also claimable. Every property is different. A professional depreciation schedule is the only way to be sure. Book with Oz Tax Online today.
Presenter
Garry Angus: Garry Angus is an experienced tax specialist with Oz Tax Online and the Accountants Plus Group, helping Australian investors review rental property deductions, depreciation and records before lodgement.
Frequently asked questions
What is the difference between Division 40 and Division 43?
Division 40 covers plant and equipment, the removable assets inside a property that wear out over time such as carpets, air conditioners, dishwashers and ovens. Division 43 covers capital works, the building structure itself such as walls, roof, concrete and the garage. They are claimed at different rates.
Can I claim depreciation on a second-hand rental property?
For second-hand properties you generally cannot claim the existing Division 40 plant and equipment that came with the house. You can usually still claim Division 43 capital works, and any new assets you buy and install yourself. Your eligibility depends on your circumstances, so professional advice is recommended.
Do I need a depreciation schedule?
Every property is different, so a professional depreciation schedule prepared by a qualified quantity surveyor is the reliable way to confirm what you can claim. Oz Tax Online can then use it to prepare your rental property tax return.