Capital works deductions

Capital works used to produce income, including buildings and structural improvements, are written off over a longer period than other depreciating assets.

Note that the land itself can't be written off and its cost isn't deductible.

The capital works deduction is available for:

  • buildings or extensions, alterations or improvements to a building
  • structural improvements such as sealed driveways, fences and retaining walls
  • earthworks for environmental protection, such as embankments.

If it isn't possible to determine the actual construction costs, you can get an estimate from a quantity surveyor or other independent qualified person. You can claim a deduction for the full cost of the estimate in the year it is incurred. Deduction rates of 2.5% or 4.0% apply, depending on the date on which construction began, the type of capital works, and how they're used.

Special rules apply to:

See also:

Last modified: 24 Jun 2015QC 45988