• Capital works deductions

    You may be able to claim a deduction for the construction costs of your property over a 25-year or 40-year period (a capital works deduction).

    You can claim a deduction if construction began after:

    • 17 July 1985 and the property is used for residential accommodation or to produce income
    • 19 July 1982 and the property is not used for residential accommodation (for example, a shop), or
    • 21 August 1979, the property is used to provide short-term accommodation for travellers and it meets certain other criteria.

    A deduction may also be available for structural improvements made to parts of the property other than the building if work began after 26 February 1992. Examples include sealed driveways, fences and retaining walls.

    The deduction does not apply until completion of the construction. The deduction is at the rate of 2.5% or 4% (adjusted for part-year claims) depending on the date the capital works began. Rental properties will help you determine if you qualify and the appropriate rate.

    See also: Rental properties – claiming capital works deductions.

      Last modified: 05 Oct 2016QC 16824