When you purchase an investment property in Australia you can begin depreciating a lot of the assets. Probably the largest asset you get to depreciate is going to be the actual building itself.

Residential investment buildings in Australia can be depreciated over 40 years - a rate of 2.5% per year - and only using the Prime method. Calculating your building depreciation is pretty straightforward:

Depreciation per year = Cost of building / 40

For example: If a building cost $100,000 to build then depreciation per year is:

$100,000 / 40 = $2,500 per year

That’s $2,500 in depreciation per year for the building. We’ll look at other assets and depreciation rates in another post.