Depreciation on a brand-new build.
A new build gives you the full depreciation schedule from settlement. An established home has already had years of it claimed by someone else. That non-cash deduction is one of the strongest reasons investors build new.
Last updated 14 June 2026. General information only, not tax advice. Confirm all figures with a registered quantity surveyor.
Depreciation is a non-cash tax deduction for the decline in value of an investment building and its fixtures. On a new build, the structure is deductible at 2.5% a year over 40 years under Division 43, and plant and equipment depreciate faster under Division 40. The Property Plug builds only new homes, so every design qualifies for a fresh schedule from day one.
The two kinds of depreciation
An investment property gives you two streams of non-cash deduction. Knowing the difference is how you read a depreciation schedule and understand why a new build claims so much more than a second-hand one.
| Type | Covers | Indicative rate | New build advantage |
|---|---|---|---|
| Division 43 capital works | Structure, roof, walls, fixed cabinetry, paving | 2.5% a year over 40 years | Full claim from settlement |
| Division 40 plant and equipment | Oven, cooktop, air-conditioning, carpets, blinds, hot water | Faster, per effective life | Brand-new plant claimable in full |
Established stock has already been depreciated.
- Full capital works from day one. A new build starts its 40-year, 2.5%-a-year Division 43 clock at settlement. On a $314,760 build the capital-works portion can be in the order of $7,869 a year [TBC quantity surveyor], a deduction the previous owners of an established home have already used up.
- Brand-new plant claimable in full. Since the 2017 rules, second-hand plant and equipment in an established home you buy is generally not deductible. A new build lets you depreciate every appliance, carpet and blind from new.
- Better after-tax cashflow. Depreciation reduces taxable income without touching your bank balance, so it lifts after-tax cashflow versus an otherwise identical established property.
- Lower real maintenance too. New builds carry warranty and near-zero maintenance for years, so more of the rent stays as net return alongside the deduction.
Get a quantity surveyor schedule
The numbers above are indicative. Your actual deductions depend on the design, the inclusions and the build cost, so a registered quantity surveyor prepares a tax depreciation schedule specific to your property. Your accountant then applies it each financial year. The schedule fee is itself tax deductible, and it usually pays for itself in the first year of claims. We flag every figure on this page as needing that schedule [TBC] rather than quoting a deduction we cannot stand behind.
- A granny flat is its own depreciable asset. The Haven (68m2) builds from $238,268 in Baldivis and adds a second schedule on top of the main home.
- Pair depreciation with a strong rental yield and a dual-income layout to push after-tax cashflow further.
- A turnkey contract maximises the day-one plant and equipment you can depreciate, because fixtures, blinds and floor coverings are all included.
This is general information only and does not take into account your objectives, financial situation or needs. It is not credit assistance or a credit quote. Consider whether it is right for you and seek advice. Finance is arranged through Central Lending Solutions, the licensed credit partner The Property Plug works with (Australian Credit Licence or credit representative number [TBC]).
How much depreciation can I claim on a new build?
Capital works on a new residential building are generally deductible at 2.5% a year over 40 years (Division 43), and plant and equipment items depreciate faster on their own schedules (Division 40). On a $314,760 build the capital-works portion alone can be a multi-thousand-dollar annual deduction. Exact figures require a registered quantity surveyor schedule [TBC].
What is the difference between Division 43 and Division 40?
Division 43 covers capital works, the structure and fixed items like walls, roof and built-in cabinetry, deductible at 2.5% a year over 40 years. Division 40 covers plant and equipment, removable items like the oven, air-conditioning, carpets and blinds, deductible faster over their individual effective lives.
Why is depreciation better on a new build than an established home?
A new build gives you the full capital-works claim from settlement and lets you depreciate brand-new plant and equipment in full. Since 2017, second-hand plant in an established home you buy is generally not deductible, so established stock has materially less to claim.
Do I need a quantity surveyor?
Yes. A registered quantity surveyor prepares a tax depreciation schedule specific to your property, which your accountant uses each year. We never publish a deduction figure for your build without one, and the schedule fee is itself tax deductible.
Does depreciation make a property positive cashflow?
Depreciation is a non-cash deduction, so it reduces taxable income without reducing your bank balance, improving after-tax cashflow. It can turn a property that costs you weekly into one that pays its way, but it is not advice. We are paid by the builder, never by you.
Build new, claim more
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