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  • Capital works (special building write-off) deductions



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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 (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
    • improvements to the property-for example, erecting a pergola, patio or carport.

    Deductions can be claimed only for the period the property is rented or is available for rent.

    If you can claim capital works (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 deductions for decline in value of depreciating assets.

    Last modified: 11 Dec 2019QC 16578