Capital works deductions on properties built before 1985
Division 43 capital works deductions are only available for buildings constructed after specific dates set by the ATO. For most investors, the critical date is 18 July 1985 — the date residential construction must have commenced for Division 43 to apply.
The key dates
| Property type | Eligible if construction commenced after | |---------------|------------------------------------------| | Residential rental | 17 July 1985 | | Short-term accommodation | 26 February 1992 | | Commercial buildings | 20 July 1982 | | Industrial buildings (older rate) | Earlier dates apply |
If your residential property was built before July 1985, the original building structure cannot be claimed under Division 43.
What you can still claim on an older property
Even if the building itself predates the threshold, the following may still be claimable:
Renovations and additions made after the threshold date. If a post-1985 extension, renovation, or structural improvement was made to an older property — by you or a previous owner — those construction costs are claimable at 2.5% per year from the date the work was completed.
Plant and equipment (Division 40). The 1985 cutoff applies only to the building structure. Internal assets — hot water systems, air conditioners, carpets, blinds, and appliances — are claimable regardless of when the building was built. The 2017 restriction on second-hand assets still applies for residential properties purchased after 9 May 2017.
How to find out if renovations occurred
Many older properties have been renovated multiple times. A quantity surveyor can investigate renovation history and establish whether any post-1985 construction costs can be claimed. This investigation often uncovers significant Division 43 deductions that owners did not know existed.
The importance of getting a professional assessment
Do not assume that an old property has no depreciation. The combination of:
…can still produce meaningful deductions even in a century-old building.