Why is Division 40 not treated the same as the property cost base?
Published 26 June 2026 · Last updated 26 June 2026
Quick Answer
Division 40 assets are generally separate depreciating assets, not the same as the land and building cost base. This matters because plant and equipment, capital works and CGT cost base adjustments can each be treated differently.
This is an important technical point.
A property purchase may include:
Land
Building structure
Capital works
Plant and equipment
Fixtures
Loose assets
Common property interests
Division 40 plant and equipment assets are generally treated separately from Division 43 capital works.
This matters because:
Division 40 assets may decline in value over effective life.
Division 43 capital works are usually building-related deductions.
Capital works deductions may reduce CGT cost base.
Second-hand residential Division 40 assets may be denied annual depreciation.
Denied Division 40 values may still be relevant for capital loss or disposal records.
The accountant needs a clear split when selling.
Do not treat the whole purchase price as one simple cost base without considering asset allocation.
Koste.ai can help identify the correct asset categories and support CGT cost base reviews.
Frequently Asked Questions
Is Division 40 part of the property cost base?
It is generally treated separately from the land and building cost base.
Does Division 40 affect CGT?
It can be relevant, but not in the same way as Division 43 capital works.
Why record assets I cannot depreciate?
Excluded second-hand assets may still be relevant for capital loss or disposal records.
Does my accountant need the split?
Yes. A clear split helps avoid incorrect tax treatment.
Can Koste.ai help?
Yes. Koste.ai can support asset separation and cost base reporting.