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  • Capitals works deduction (special building write-off)

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    You can deduct certain kinds of construction expenditure. In the case of residential rental properties, the deductions would generally be spread over a period of 25 or 40 years. These are referred to as capital works deductions (special building write-off deductions). The deduction is limited to 100 per cent of the construction expenditure.

    Deductions based on construction expenditure apply to capital works such as a building or an extension-for example, adding a room or garage; alterations-such as removing or adding an internal wall; or improvement to a building-for example, erecting a pergola, patio or carport. Deductions are allowable only for the period the property is rented or is available for rent.

    Where you are entitled to capital works deductions (special building write-off deductions) , the construction expenditure on which those deductions are based cannot be taken into account in working out any other types of deductions to be claimed, such as depreciation.

    Last modified: 28 Jul 2003QC 16187