Division 40 · outside or in the laundry
Electric hot water system: effective life and depreciation rate
The tank and its element are one asset with a 12-year life. Its data plate carries the date of manufacture, which dates a second-hand unit exactly.
- Effective life
- 12 yrs
- DV · PC rate
- 16.67% · 8.33%
- Installed new, 2026
- $1,734
The Commissioner's table sets gas and solar units beside electric ones under hot water systems, their piping left out (the pipes are part of the building): a gas hot water system has the same 12-year life and a solar hot water system a 15-year life, at about $2,191 and $3,996 installed new. A unit replaced while the property is let is a new asset, deductible from the day it is installed.
Five years of an electric hot water system bought new
An electric hot water system costing $1,734, held for each full year, under each method. At $1,734 it is above the $1,000 low-cost threshold, so it is deducted at its own rate. Under diminishing value its written-down value is $836 after four full years, under $1,000, so from year 5 it can go into the low-value pool.
| Year | Diminishing value 16.67% | Prime cost 8.33% |
|---|---|---|
| 1 | $289 | $145 |
| 2 | $241 | $145 |
| 3 | $201 | $145 |
| 4 | $167 | $145 |
| 5 | $139 | $145 |
| Five years | $1,037 | $725 |
Full years of 365 days. Diminishing value and prime cost are worked by days held ÷ 365 (sections 40-72 and 40-75), so a year that includes 29 February, held throughout, claims 366/365 of what a 365-day year would on the same value. The first year is pro-rated by the days the item is held for earning rent, except in the pool, whose rates are not by the day.
What an electric hot water system cost installed, by year
- 2000$1,067
- 2010$1,285
- 2020$1,450
- 2026$1,734
The effective life of an electric hot water system fitted new in a property built in 2014 ends in 2026, while the building's own capital works deduction runs to the 2053–54 income year: see depreciation on a property built in 2014.
Price is for one item, supplied and installed.
By dwelling type
Our dwelling pages price an electric hot water system with the typical plant of a house and a unit in every state; two states of each:
- A house in the Australian Capital Territory
- A house in the Northern Territory
- A unit in Queensland
- A unit in the Northern Territory
Each is priced at its state's rates, and the state's own page sets the four types side by side: Queensland, the Australian Capital Territory and the Northern Territory.
Common questions
What is the effective life of an electric hot water system?
12 years, as the Commissioner of Taxation determines it for "Electric" under "Hot water systems (excluding piping)" in the residential property operators' table of the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025, which most schedules use (an owner may estimate its own instead, section 40-105). Five of the other 36 items here share it, among them an oven and a gas hot water system.
What is the depreciation rate for an electric hot water system?
16.67% a year under diminishing value (200% ÷ 12), taken from what is left of the value: $289 of the $1,734 it costs installed new in the first full year, $139 in the fifth. Or 8.33% a year under prime cost (100% ÷ 12), taken from the cost: $145 in each of the first five. An item first held before 10 May 2006 takes 150% ÷ 12 under diminishing value.
Can I claim an electric hot water system that came with the property?
Generally not, for an individual, a self-managed super fund or most trusts and partnerships that bought an established property at or after 7.30 pm on 9 May 2017 (section 40-27; the 2017 rules set out who it reaches and the exceptions). Such plant is still valued, at what it costs new in the year the property is bought less its age and condition: for an electric hot water system 6 years old in good condition, about $867 of the $1,734 new in 2026, a value whose decline can make a capital gain or loss when it is sold or scrapped. For an electric hot water system bought new for the property while it is let, and never used while it was the owner's home, deductions start on the day of installation.
Other items
- Gas hot water system · 12 yrs
- Solar hot water system · 15 yrs
- Solar power system · 20 yrs
- Split-system air conditioner · 10 yrs
- Ducted air conditioning · 15 yrs
- Window or wall air conditioner · 10 yrs
- Evaporative cooler · 15 yrs
- Gas space heater · 15 yrs
- All items
Hot water systems (excluding piping) in the Commissioner's table
General information only, not advice about your circumstances. Speak to a registered tax agent before relying on it.