Division 43 is the category which addresses the building write-off component of your property. The historical construction costs include fees for preliminary items such as design fees, engineering and building approval costs. Where actual costs are not known, a quantity surveyor has estimated this amount by determining the appropriate costs for the building/structural improvement of the asset as at the date it was constructed. The percentage rate at which the building depreciates is dependent upon when construction commenced and the intended use of the building for i.e. commercial, manufacturing or residential purposes. This percentage will either be 2.5% or 4% and has been applied accordingly with respect to the information provided to us.
In some cases, the Division 43 component will not be applicable to your property if it was constructed prior to 15th September 1987 or the structural improvements made on your property occurred prior to 27th of February 1992. It is worth mentioning that the only method of depreciation for any capital works is via the prime cost method.
In cases where the property is used for other purposes such as commercial or manufacturing, the cut-off date for claims of depreciation on the construction cost (Division 43) differs that the asset owner may also claim 2.5% between 20th July 1982 through to 21st August 1984.
See also – Division 40
Disclaimer: Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your investing affairs.