Jun 4th, 2025

Maximize Property Investment Returns: Depreciation Deductions for a $700,000 New Build in Australia

Maximise Your Property Depreciation Benefits in Australia

For Australian property investors, depreciation offers a valuable tax saving, especially on newly built assets. You can claim deductions under two main categories: Capital Works (Division 43) and Plant & Equipment (Division 40).

Depreciation Categories

Capital Works (Division 43)

  • Structural components (walls, roofing, flooring, etc.)
  • Deduction rate: 2.5% per annum over 40 years

Plant & Equipment (Division 40)

  • Fixtures and fittings such as carpets, ovens, air-conditioning units
  • Depreciate over the asset’s effective life
  • Low-cost items under $300 can be fully expensed in the first year

Illustrative Example: $700,000 New Build

Based on:

  • Land value: $280,000 (not depreciable)
  • Building cost: $420,000
  • Plant & equipment: $50,000
Year Capital Works Plant & Equipment Total Depreciation Tax Saving (32.5%)
1 $10,500 $12,000
(including $2,000 low-cost items)
$22,500 ≈ $7,313

Other Deductible Expenses

  • Loan interest
  • Borrowing costs (establishment fees, legal charges)
  • Property management fees
  • Council rates, insurance premiums
  • Repairs, maintenance, cleaning

Why Depreciation Makes a Difference

Depreciation is a non-cash deduction that reduces your taxable income, improving cash flow. New properties in particular deliver higher depreciation benefits due to recent construction and modern fittings.

Getting Started

To fully leverage depreciation, engage a qualified quantity surveyor to prepare a detailed schedule. Firms like BMT and Washington Brown specialise in maximising your allowable claims.

For further strategies on boosting your property investment returns, visit Investor Profile and connect with seasoned experts.

Depreciation Guide

Discover the #1 tax secret wealthy Australian property investors use to grow their portfolios faster — even in a high interest rate environment.

  • Learn how to turn wear and tear into wealth
  • See real examples of $15,000+ first-year deductions
  • Understand how to structure your purchases for maximum after-tax ROI

Download Your Free Wealth Building Guide

This ebook reveals how to legally slash your tax bill while building long-term wealth through property. Learn the strategies savvy investors use to gain an edge — even before settlement.

  • Maximise tax deductions and improve cash flow
  • Understand Division 40 vs 43 and how to claim both
  • Position yourself to reinvest and scale faster
Free Instant Access
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