Depreciation schedules after 1 July 2027: still the hidden return driver
Division 40 and Division 43 deductions are untouched by the Budget — but they only apply meaningfully to new builds. Here's why the depreciation gap widens from 2027.
The 2017 changes to Division 40 already restricted plant-and-equipment depreciation on second-hand residential property to original purchasers. The 2026 Budget did not alter that — but by narrowing negative gearing to new builds, it amplifies the relative advantage of new-build depreciation schedules from 1 July 2027 onward.
For a typical new house-and-land in year one, combined Division 40 and Division 43 deductions can exceed $15,000. That is real cash, before any consideration of interest deductibility.
How we model it
Every Hera acquisition includes a forward depreciation schedule modelled by a quantity surveyor before contracts exchange, not after settlement. That lets us compare assets on a true after-tax-cash-flow basis from day one.
Dax Stanley
Founder & Principal Strategist, Hera Property. #1 international bestselling author of Real Estate Investing Using ChatGPT.