Tax Depreciation Basics · Koste Knowledge Base

What is Division 40 depreciation?

Published 26 June 2026 · Last updated 26 June 2026

Quick Answer

Division 40 depreciation generally relates to plant and equipment assets that decline in value over time. In property, this can include appliances, carpet, blinds, air conditioning, furniture and commercial fit-out assets.

Division 40 is the part of the tax rules that deals with depreciating assets.

In property, Division 40 assets may include:

Ovens
Dishwashers
Carpet
Blinds
Curtains
Air conditioning
Hot water systems
Ceiling fans
Furniture
Security systems
Commercial equipment
Office fit-out assets
Hospitality equipment

Division 40 assets are generally separate from the building structure. They are depreciated over their effective life or another applicable method.

Important note: For second-hand residential investment properties acquired after the 9 May 2017 changes, depreciation on existing previously used Division 40 assets may be restricted. However, new assets purchased by the investor may still be claimable.

Commercial property may have broader Division 40 opportunities.

Frequently Asked Questions

Is carpet Division 40?

Carpet is commonly treated as a depreciating asset, subject to the rules.

Are appliances Division 40?

Many appliances are Division 40 assets.

Can I claim second-hand Division 40 assets?

Annual depreciation may be restricted for second-hand residential property assets acquired after 9 May 2017.

Is Division 40 part of the building cost?

It is generally treated separately from Division 43 capital works.

Can Koste.ai identify Division 40 assets?

Yes. Koste.ai can support the information needed for a depreciation schedule.

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Written by Koste Team · Koste Chartered Quantity Surveyors · AIQS Member · RICS Member · TPB Registered · 1300 669 400 · info@koste.ai