Depreciation Calculator
Calculate depreciation for rental properties and investment assets
Estimate annual tax deductions for rental property fixtures, appliances, and equipment. Compare Prime Cost vs Diminishing Value methods with ATO-compliant calculations.
Awaiting Parameters
Please specify a valid asset cost, purchase date, and effective life on the left to see the depreciation schedule in real-time.
How to Use This Calculator
Search for Asset
- Use the search box to find your asset type
- Browse ATO effective life database
- Select the matching asset category
Enter Asset Details
- Purchase price and date
- Choose depreciation method
- Specify business use percentage
Review Depreciation Schedule
- See annual depreciation amounts
- View cumulative depreciation
- Export schedule or save to profile
Understanding Property Depreciation for Landlords
Property depreciation allows Australian landlords and property investors to claim tax deductions for the decline in value of rental property assets. This includes Division 40 plant & equipment (appliances, carpets, blinds, air conditioners) and Division 43 capital works (building structure).
Rather than claiming the full cost upfront, depreciation spreads deductions over the asset's effective life as determined by the ATO. The ATO allows two methods: Prime Cost (straight-line) and Diminishing Value (accelerated). Your choice affects how much you can claim each year and your cashflow timing.
Instant Asset Write-Off
For eligible small businesses (turnover <$10M), assets under the threshold can be immediately deducted in full. Check current threshold as it changes with government policy.
Prime Cost vs Diminishing Value Methods
| Feature | Prime Cost Method | Diminishing Value Method |
|---|---|---|
| How It Works | Equal deduction each year (straight-line) | Higher deduction in early years, decreases over time |
| Formula | Asset Cost ÷ Effective Life (years) | Written Down Value × (200% ÷ Effective Life) |
| Year 1 Deduction | Lower | Higher (2x Prime Cost rate) |
| Predictability | Same amount each year (easy to forecast) | Decreases annually (harder to forecast) |
| Cashflow Impact | Steady deductions spread evenly | Front-loaded deductions (better short-term cashflow) |
| Best For | Assets you'll keep for full effective life | Assets you may upgrade/sell early |
| Example | $10,000 asset, 5yr life = $2,000/year for 5 years | $10,000 asset, 5yr life = $4,000 yr1, $2,400 yr2, $1,440 yr3... |
Once you choose a method for an asset, you must continue using that method unless you change the asset's use (e.g., from personal to business).
Rental Property Depreciation Guide for Landlords
Australian landlords can claim two types of property depreciation as tax deductions:
Division 40: Plant & Equipment
Removable assets that decline in value over time:
- Appliances (ovens, dishwashers, fridges)
- Carpets, blinds, curtains
- Air conditioners (split & ducted)
- Hot water systems
- Light fittings & ceiling fans
- Security systems & smoke alarms
Choose Prime Cost or Diminishing Value method
Division 43: Capital Works
Building structure and permanent fixtures:
- Building construction (post-1985)
- Structural renovations
- Extensions & alterations
- Driveways, fencing, retaining walls
- Fixed landscaping
Deducted at 2.5% per year (40-year life)
💡 Tip: Quantity Surveyor Reports
For comprehensive rental property depreciation, landlords typically get a quantity surveyor report ($500-$800) that identifies ALL depreciable assets and estimates building construction costs. This often finds $5,000-$15,000 in annual deductions you might miss otherwise.
Common Rental Property Assets & Effective Lives
| Asset | Cost Example | Effective Life | Annual Deduction (PC) |
|---|---|---|---|
| Oven (built-in) | $1,800 | 12 years | $150/year |
| Dishwasher | $1,200 | 10 years | $120/year |
| Carpet (entire property) | $3,500 | 8 years | $438/year |
| Air conditioner (split system) | $2,500 | 10 years | $250/year |
| Blinds (entire property) | $1,500 | 6.67 years | $225/year |
| Hot water system | $2,000 | 12 years | $167/year |
| Total Annual Depreciation | $1,350/year | ||
Example shows Prime Cost method. Diminishing Value would give higher deductions in early years. These are common scenarios - actual amounts vary by property age and condition.
🏠 Property Depreciation Calculator Tip
Use this calculator to estimate depreciation for individual assets in your rental property. For a complete depreciation schedule including capital works (Division 43), consult a quantity surveyor or tax professional.
Real-World Depreciation Examples
Example 1: Contractor Laptop
Asset: $2,500 laptop purchased July 1, 2024
Effective Life: 2 years (ATO standard for computers)
Use: 100% business
FY25: $1,250 | FY26: $1,250
FY25: $2,500 × 100% = $2,500 (claimed in full, year 1)
Note: With 100% DV rate, full cost is claimed immediately. DV preferred for technology that depreciates quickly.
Example 2: Rental Property Oven
Asset: $1,800 oven purchased October 15, 2024
Effective Life: 12 years (ATO standard for ovens)
Use: Rental property (100% income-producing)
FY25 (partial year): $150 × (266 days ÷ 366) = $109
FY25: $1,800 × 16.67% × (266÷366) = $218
FY26: ($1,800 - $218) × 16.67% = $264
Purchased mid-year so must prorate first year. DV gives slightly higher deduction over first few years.
Example 3: Tradie Trailer
Asset: $8,000 work trailer purchased March 1, 2025
Effective Life: 8 years (ATO standard for trailers)
Use: 80% business, 20% private
FY25 (partial): $800 × (122÷366) = $267
FY25: ($8,000 × 80%) × 25% × (122÷366) = $534
FY26: ($6,400 - $534) × 25% = $1,467
Must apportion for private use (20% not claimable). Keep logbook for 12 weeks to substantiate business %.
Example 4: Instant Write-Off
Asset: $15,000 equipment purchased June 1, 2025
Business Turnover: $5M (qualifies for instant write-off)
Threshold: Assume $20,000 threshold applies
Asset cost is below threshold, so entire amount is deductible in year of purchase (no depreciation needed)
Check ATO website for current threshold amount as government policy changes. Small business pooling is alternative if threshold not met.
Effective Life Guidelines (ATO Standard)
| Asset Type | Effective Life | Common Examples |
|---|---|---|
| Computers | 2 years | Laptops, desktops, tablets |
| Office Furniture | 10-13 years | Desks, chairs, filing cabinets |
| Motor Vehicles | 8 years | Cars, utes, vans (non-luxury) |
| Tools | 4-10 years | Power tools, hand tools (varies by type) |
| Rental Property Appliances | 6-12 years | Ovens, dishwashers, fridges |
| Air Conditioning | 10-20 years | Split systems, ducted (varies by type) |
| Building Capital Works | 40 years | Rental property construction (post-1985) |
These are ATO standard effective lives. You can self-assess a shorter life if you can demonstrate the asset will wear out faster due to intensive use or harsh conditions.
Common Depreciation Questions
Can I switch depreciation methods mid-way?
Generally no, unless the asset's use changes (e.g., from personal to business or vice versa). Once you choose Prime Cost or Diminishing Value, you must continue with that method for the asset's life.
What if I bought an asset second-hand?
Use the remaining effective life, not the original. For example, if a 5-year laptop was purchased 2 years old, you depreciate it over the remaining 3 years. If you can't determine age, the ATO allows you to use 2/3 of the standard effective life.
Do I claim depreciation if the asset is paid off?
Yes! Depreciation is based on the asset's decline in value, not loan repayments. You continue claiming depreciation regardless of whether you've paid off the purchase price, as long as the asset is still used for income-producing purposes.
What happens when I sell a depreciated asset?
If you sell for more than the written-down value (cost minus accumulated depreciation), the difference is assessable income (balancing adjustment). If you sell for less, you can claim the loss. This prevents you from claiming too much depreciation.
Using This Calculator
This depreciation calculator helps you:
- Compare methods side-by-side: See Prime Cost vs Diminishing Value deductions year-by-year to choose the best method for your situation.
- Handle partial years: Automatically prorates deductions if you purchased the asset mid-year (e.g., bought in October = only 9 months claimed in FY).
- Account for business use %: If you use the asset 80% for business and 20% private, only 80% of depreciation is claimable.
- Visualize depreciation: Charts show how written-down value decreases over time and how annual deductions compare between methods.
- Export for tax time: Download CSV with yearly breakdown to provide to your accountant or attach to your tax return.
Tip: For assets you plan to upgrade frequently (like tech), Diminishing Value usually gives better cashflow. For long-term assets (like rental property fixtures), Prime Cost provides predictable deductions.