1985 to 1987
Depreciation on a property built in 1987
A residential building whose construction began in 1987 is deducted at 2.5% of its construction cost a year, for construction begun after 15 September 1987. Counting from 30 June 1988, the first 30 June it could have been finished by, its 40 years run from the 1988–89 income year to 2027–28, and from 2026–27 it has 2 income years left. Those years hold only for construction begun on or after 16 September 1987: begun before it, as a house finished in 1987 may have been, nothing is left on the building, and without a record of the day building began, that is the reading that does not overstate the deduction. Our national series puts new houses at $334 per m² of floor area in the year to 30 June 1987, 5% up on 1986's $319.
- Rate
- 2.5%
- Years left
- 0 or 2
- Last year
- 2027–28
Construction begun between 1 January and 15 September 1987 is deducted at 4% a year over 25 years instead, and has now run out.
What a house built in 1987 cost, state by state
A standard 200 m² single-storey brick veneer house at 1987 rates, less the builder's plant (9.8% of its cost that year), listed separately; the deduction is 2.5% of it a year.
| State | Rate per m² in 1987 | Construction cost | Deduction a year | Left to claim |
|---|---|---|---|---|
| New South Wales | $420 | $70,876 | $1,772 | $3,544 |
| Victoria | $475 | $80,137 | $2,003 | $4,006 |
| Queensland | $335 | $56,525 | $1,413 | $2,826 |
| Western Australia | $280 | $47,232 | $1,181 | $2,362 |
| South Australia | $345 | $58,283 | $1,457 | $2,914 |
| Tasmania | $418 | $70,618 | $1,765 | $3,530 |
| Australian Capital Territory | $438 | $73,887 | $1,847 | $3,694 |
| Northern Territory | $476 | $80,324 | $2,008 | $4,016 |
Indicative. "Left to claim" is the deduction a year times the 2 income years left; the first and last are usually part years. The deduction a year and what is left to claim are for construction begun on or after 16 September 1987; begun before it, nothing is left on the building.
The cost per m² around 1987
From 1986 to 1987 the standard house's rate per m² rose 5%, from $379 to $398: the 12th steepest of the 40 year-on-year changes since 1985. In 1988 it rose 9% again, to $434. At 2025's rates it costs $347,938 to build, 5.2 times its 1987 cost of $67,116, and the deduction is worked from the 1987 figure.
Building in 1987, nationally
The ABS measure: the value of new houses built (land excluded) over their floor area, so it follows the kind of house as well as prices, and its 1987 is the year to 30 June 1987.
The rate per m²
Our national series puts new houses in the year to 30 June 1987 at $334 per m² of floor area, 5% up on 1986's $319 and 12% up over the 2 years from 1985's $298, where the series starts.
The average new house
We put the average new house of 1987 at about 175 m² of floor area, read between the ABS figures for 1986 (169.7 m²) and 1988 (181 m²): at 1987's $334 per m², it cost about $59,000 to build.
How the figure was reached
How 1987's figure was arrived at: between the 1986 and 1988 figures, following the ABS input to house construction index. It rests on 1 source and is graded B, from A (a published figure) to D (an assumed rate of growth).
1987 in Division 43's history
- 16 September was the year's 259th day: construction begun in its first 258 days, to 15 September, was at 4% over 25 years, and that begun in its last 107 days is at 2.5% over 40 years.
- Counting the calendar year each began in as its first, 1987 is the 3rd year of capital works for homes (from 18 July 1985).
- 1987 came 5 years before structural improvements' claims (from 27 February 1992) and 30 years before section 40-27 on second-hand plant (from 7.30 pm on 9 May 2017).
Where it stands in 2026–27
2026–27 is the 39th of its 40 income years at 2.5%. 2 income years, this one counted, carry 5% of its construction cost; the 95% of the 38 years before is spent, whoever owned it then. The first half of its years ended with 2007–08. Its 40 income years at 2.5% are those of construction begun on or after 16 September 1987; begun before it, nothing is left on the building.
A kitchen replaced ten years on, in 1997, is new capital works with 40 years of its own, claimed until 2037: 9 years past 1987's own last income year, 2027–28. Every renovation begun after 15 September 1987 is the same, whatever the house's own date (those begun before then have run out); its invoices and photos date it.
Renovating a rental built in 1987: the old plant and works Houses of 1985 to 1987 beside the other years Using a previous owner's scheduleA standard house's plant, fitted new in 1987
In 1987 the builder's plant was about 9.8% of a standard house's cost, listed apart from the building; plant prices stood at 54% of 2020's by our plant index, and the ABS house construction price index for Australia (before the September quarter 1996, the ABS project home price index for the weighted average of the eight capitals, linked to it over the four quarters to June 1999) stood at 33% of its June quarter 2020 level in the June quarter 1987. The plant's own prices start in 1990, so 1987's are 1990's taken back by the plant index, which put 1987's prices at 84% of 1990's. Fitted in 1987, with each life counted from 30 June 1987 as the building's years are, all 6 below have passed their effective lives, the last in 1998–99; a replacement bought new for a let property starts its own.
| Item | Installed new, 1987 prices | Effective life | Life ends, income year |
|---|---|---|---|
| Oven | $858 | 12 years | 1998–99 |
| Cooktop | $338 | 12 years | 1998–99 |
| Dishwasher | $572 | 8 years | 1994–95 |
| Electric hot water system | $777 | 12 years | 1998–99 |
| Carpet | $2,037 | 8 years | 1994–95 |
| Blinds | $777 | 10 years | 1996–97 |
Common questions
How much depreciation can I claim on a house built in 1987?
On a 1987 building, 2.5% of what it cost to construct, each year until 2027–28. For a standard 200 m² brick veneer house that is about $1,772 a year in New South Wales, $2,003 in Victoria and $1,413 in Queensland, with 2 income years left. That is for construction begun on or after 16 September 1987; begun before it, nothing is left on the building. Construction begun between 1 January and 15 September 1987 is deducted at 4% a year over 25 years instead, and has now run out. Plant new to you adds to that, as does any renovation begun after 15 September 1987.
I bought a 1987 property second-hand. Does the deduction start again?
No: a 1987 building's 40 years run from its completion, not from your purchase, so a buyer claims the 2 income years left, 2026–27 to 2027–28, on the original construction cost rather than the price paid, where building began on or after 16 September 1987. Fitted new in 1987, every one of the 181 kinds of plant our catalogue prices has passed its effective life, the last ending in 2016–17. Section 40-27 reaches plant acquired from 7.30 pm on 9 May 2017, when a 1987 house was 30 years old or so: bought from an earlier owner since then, the plant that came with a 1987 house is generally not deductible (the 2017 rules set out who it reaches and the exceptions).
What was the rate for 1987?
2.5% a year over 40 years, for construction begun after 15 September 1987: counting from 30 June 1988, the 1988–89 to 2027–28 income years. Construction begun between 1 January and 15 September 1987 is deducted at 4% a year over 25 years instead, and has now run out. Structural improvements such as a driveway, fence or retaining wall begun with a 1987 house claim nothing, as none begun before 27 February 1992 does; one begun on or after it claims at 2.5% over 40 years.
What did it cost to build a house in 1987?
In the year to 30 June 1987, our national series puts new houses at $334 per m² of floor area, 12% up over the 2 years from 1985's $298, and the average new house, about 175 m², cost about $59,000 to build. At 1987's rates, our standard 200 m² single-storey brick veneer house, less the plant listed separately, cost about $67,116 at the national rate, against $63,818 in 1986 and $73,608 in 1988. In 1987 it was cheapest in Western Australia, at $47,232, and dearest in the Northern Territory, at $80,324. Where the 1987 build's own cost is not documented, a schedule estimates it at 1987's rates, about $67,116 for that house nationally, by an appropriately qualified person, as Taxation Ruling TR 97/25 accepts.
General information only, not advice about your circumstances. Speak to a registered tax agent before relying on it.