Tax depreciation on a duplex
A duplex — two dwellings on one title or two separate titles — offers potentially double the depreciation deductions compared to a single dwelling, because each unit has its own structure, fixtures, and fittings.
Division 43 — Capital works
The construction cost of each dwelling is depreciable at 2.5% per year. For a duplex with a combined construction cost of $600,000, Division 43 alone produces $15,000 per year in deductions.
Common Division 43 items in a duplex include:
- External walls, roof, and foundations shared or separate between dwellings
- Internal walls and floor slabs
- Kitchens and bathrooms (structural components)
- Driveways and paths
- Fencing between and around the dwellings
Division 40 — Plant and equipment
Each dwelling has its own set of plant and equipment:
- Ovens, cooktops, dishwashers
- Air conditioning units
- Hot water systems (often one per dwelling)
- Carpets and floor coverings
- Blinds and curtains
Who can claim what
If you own the entire duplex and rent both dwellings, you claim all the depreciation. If you own only one dwelling in a strata duplex and rent it out, you claim depreciation proportional to your ownership.
Shared areas and costs
Shared elements — like a common driveway or boundary fence — are typically apportioned equally between the two dwellings. Your quantity surveyor will handle this allocation in the depreciation schedule.
New vs second-hand duplex
A newly built duplex offers the best depreciation outcome because:
An older duplex still qualifies for Division 43 (on the remaining building life from the original construction date after July 1985) but Division 40 for plant and equipment is restricted if purchased second-hand after 9 May 2017.