Division 40 · roof
Solar power system: effective life and depreciation rate
The panels, inverter and mounting are one asset over 20 years. A battery added later is its own asset from its install date.
- Effective life
- 20 yrs
- DV · PC rate
- 10% · 5%
- Installed new, 2026
- $4,899
Collectors that heat water are a different asset: a solar hot water system's collectors, tank and pump are one asset with a 15-year life, five years shorter than a solar power system's, at about $3,996 installed new.
Five years of a solar power system bought new
A solar power system costing $4,899, held for each full year, under each method. At $4,899 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 $908 after 16 full years, under $1,000, so from year 17 it can go into the low-value pool.
| Year | Diminishing value 10% | Prime cost 5% |
|---|---|---|
| 1 | $490 | $245 |
| 2 | $441 | $245 |
| 3 | $397 | $245 |
| 4 | $357 | $245 |
| 5 | $321 | $245 |
| Five years | $2,006 | $1,225 |
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 a solar power system cost installed, by year
- 2000$3,015
- 2010$3,629
- 2020$4,096
- 2026$4,899
The effective life of a solar power system fitted new in a property built in 2006 ends in 2026, while the building's own capital works deduction runs to the 2045–46 income year: see depreciation on a property built in 2006.
Price is for a 6.6 kW system with its inverter.
By dwelling type
Our dwelling pages price a solar power system with the typical plant of a house in every state; two states of each:
Each is priced at its state's rates, and the state's own page sets the four types side by side: New South Wales and the Northern Territory.
Common questions
What is the effective life of a solar power system?
20 years, as the Commissioner of Taxation determines it for "Solar power generating system (incorporating batteries, inverters, solar panels, regulators)" under "Assets generally" 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). No other item here has the same life; the nearest are an evaporative cooler at 15 years and a lift at 30 years.
What is the depreciation rate for a solar power system?
10% a year under diminishing value (200% ÷ 20), taken from what is left of the value: $490 of the $4,899 it costs installed new in the first full year, $321 in the fifth. Or 5% a year under prime cost (100% ÷ 20), taken from the cost: $245 in each of the first five. An item first held before 10 May 2006 takes 150% ÷ 20 under diminishing value.
Can I claim a solar power 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 a solar power system 10 years old in good condition, about $2,450 of the $4,899 new in 2026, a value whose decline can make a capital gain or loss when it is sold or scrapped. For a solar power 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.
What does it cost to install a solar power system?
About $4,899 installed new in 2026, from our cost database (a 6.6 kW system with its inverter), and about $3,629 in 2010. The other items here nearest it in price are vinyl plank flooring (about $4,784, with a 10-year life) and carpet (about $4,545, with an 8-year life).
Other items
General information only, not advice about your circumstances. Speak to a registered tax agent before relying on it.