How much can I save with property depreciation?

Depreciation comes in two parts: Division 40 (plant + equipment - carpets, blinds, appliances) and Division 43 (capital works - structural building). Combined annual deductions on a 5-10 year-old residential property typically run $8,000-$15,000 in early years, declining as the diminishing-value Div 40 schedule winds down.

Quantity Surveyor (QS) reports cost $500-$800 (one-off, fully deductible) and itemise every depreciable component with effective lives + values. Without a QS report, most investors miss Div 43 entirely (you can't claim what you can't quantify) and conservatively estimate Div 40, leaving $5K-$10K/year on the table.

Tax effect at typical investor marginal rate (39%): $10K depreciation = $3,900 refund. Over a 10-year hold, accumulated depreciation refunds total $25K-$45K depending on property age + structure. Material to overall return profile.

Note: Div 43 amounts claimed reduce CGT cost base on a 'recapture' basis at sale - but the recapture is offset by the 50% CGT discount, so net effect is roughly half the depreciation benefit comes back as CGT, half is permanent. Still favourable in tax-deferral terms.