Capital Allowances (Division 40 ITAA 1997)
Capital allowances are available in the form of plant or depreciating assets. Whether a property is new or second-hand, an investor can claim plant if the property is income producing. Assets that may be considered plant include air-conditioning, carpet, blinds and whitegoods. Investors may be entitled to claim up to (5% - 20%) of their property's value as depreciable plant depending on the building's type, contents and sale contract conditions.
Capital Works Deductions (Division 43 ITAA 1997)
If an investment property was built after 17 July 1985 for residential buildings or 19 July 1982 for commercial properties it can be eligible for capital works deductions or building allowances on the structure of the building. The rate of depreciation is either 2.5% or 4% depending on the construction commencement date of the building.
Property owners may also be eligible to claim deductions for renovations, refurbishments and extensions carried out on their properties.
