Every July, the same cluster of questions surfaces in emails and phone calls. “I replaced all the curtains in my investment property last year — can I claim them on this year’s return?” “A roller blind failed and I replaced it with a new one — is that a repair, or do I have to depreciate it over years?” “The investment property I just settled on came with curtains already installed — can I add them to my depreciation schedule?”

The questions sound similar. The answers sit in two completely different parts of the Australian tax system, and one of the rules was quietly tightened in 2017 — the year a lot of landlords first discovered that something they used to be able to claim, they no longer could.

This article is general information, not tax advice. The Australian Taxation Office’s rules change, and every landlord’s circumstances are different. What you can claim and how you claim it should always be confirmed with a TPB-registered tax agent before you lodge. What this article does is walk through the three things landlords most commonly get wrong: the two-bucket structure, the 2017 second-hand rule, and the records you should start keeping now for next year’s return.

1. Two Different Buckets: Capital Works vs Plant & Equipment

When Australian tax law talks about claiming expenditure on a residential investment property, it sorts that expenditure into two broad buckets: Capital Works (Division 43 of the ITAA 1997) and Plant & Equipment (Division 40). The two buckets depreciate at different speeds, follow different methods, start at different points, and behave differently when ownership changes.

Capital Works (Div 43) broadly covers the building itself — walls, roofing, tiles, bathroom tiling, built-in cabinetry, fixed fencing. This kind of expenditure is generally deducted across a long period, typically 40 years at 2.5 per cent per year. You cannot write it all off in the year you spend it; it spreads across decades.

Plant & Equipment (Div 40) covers items inside the building that can be removed independently and that have their own useful working life — hot water systems, air-conditioners, fridges (if supplied), carpet, washing machines, ovens, clotheslines. Crucially for this article, curtains and blinds also sit here. These assets depreciate over the effective life set out in the ATO’s effective life determination. The specific years vary by asset and are updated periodically — the safest reference is the ATO’s depreciating assets in rental properties page.

Why does this two-bucket distinction matter for a landlord? Because it directly determines one thing: new curtains and blinds you install in an investment property almost always fall into the Div 40 bucket — depreciable over their effective life, not over 40 years like the building. That makes them a relatively faster-moving deduction than the building shell. It is also exactly why the 2017 rule below lands so directly on them.

The ATO’s Residential rental properties guide and Capital works deductions page explain the boundary between the two buckets in more detail. Read the source, not the social-media summary of it.

2. The 2017 Change: Inherited Second-Hand Plant & Equipment Generally Can’t Be Claimed by New Owners

The formal name is the Treasury Laws Amendment (Housing Tax Integrity) Act 2017. It addressed a long-standing practice the ATO had observed, where the same second-hand plant and equipment was claimed across multiple successive owners. After the rule took effect, the position narrowed to something very specific for landlords:

For residential investment properties acquired (by contract date) after the 2017 Federal Budget evening of 9 May 2017, the second-hand Plant & Equipment you inherit at settlement — including curtains, blinds, hot water systems, washing machines, air-conditioners and so on — generally cannot be added to your own depreciation schedule.

But — and this part is critical — Plant & Equipment you buy and install yourself, with your own money, after settlement, is not restricted by that rule, and can generally be depreciated over its effective life in the normal way.

That is why “curtains that came with the investment property I just bought” and “curtains I installed myself after settlement” are two materially different things in tax terms.

Two common scenarios.

Scenario A. You buy a three-bedroom property mid-2025 and list it for rent immediately after settlement. The home already has a full set of five-year-old roller blinds and curtains. As the new owner, those inherited window furnishings generally cannot be added to your own Div 40 schedule.

Scenario B. Same property — but after settlement you discover the existing curtains are damaged and mouldy, and you replace the entire set with new curtains before listing for rent. The newly installed curtains, paid for and installed by you, are generally treated as new Div 40 plant and equipment and can be depreciated over their effective life.

The cash outlay in both scenarios can look similar. The tax treatment is not. This is the most common trap for landlords who bought after May 2017 — assuming “everything in the house depreciates”, and only finding out at return time that the inherited portion is blocked by the rule.

Whether your specific settlement falls inside the post-2017 regime, and whether any of the limited exceptions apply, is a question for a TPB-registered tax agent looking at your actual contract — not for a blog post.

3. Repair vs Replacement vs Improvement — Three Words, Three Tax Treatments

This is the second-most-common point of confusion. On the surface they all look like “I spent money fixing something at the investment property”. In tax terms they behave very differently.

Repair. Restoring something that has worn or broken back to its original condition, without materially improving it. Replacing a snapped pull-cord on a Roman blind with the same kind of cord, or re-sewing a loose curtain ring, generally sits here. Repair expenditure is typically deductible in the year it is incurred — claimed in full, not depreciated.

Replacement. Replacing an entire asset with a new one of the same kind. Pulling down a whole living-room set of sun-faded roller blinds and installing a complete new set is usually treated as the acquisition of a new Div 40 asset and depreciated over its effective life — not deducted in full in the year of purchase.

Improvement. Upgrading the asset to a higher specification or function than before. Replacing a light-weight blockout blind with a full thermal-lined blockout curtain, or upgrading a manual venetian to a motorised smart blind, will generally be treated as a capital improvement to the property, not a same-year repair.

Why does this matter? Because the same dollar amount can either come off this year’s taxable income in one hit, or be spread across many years. The ATO has clear positions on where the boundary sits and audits them when claims look out of pattern.

One detail that catches landlords out: where work is required to fix something that was already broken at the time of settlement — sometimes called “initial repairs” — the ATO generally treats this as capital expenditure rather than a same-year deductible repair, even if the work looks like a repair on paper. The line between “initial repair after settlement” and “ongoing maintenance during the rental period” is exactly the kind of grey area you want a tax agent to call.

4. Records Are the Ticket — Start Keeping These Now

Whichever of the buckets above applies, a deduction without supporting records is hard to defend. If the ATO reviews the claim, memory and bank statements are usually not enough on their own. Before next year’s return, for every new curtain, blind or track installed on the property, keep the following:

1. Full tax invoice. Date, vendor, item description (brand, model, dimensions, spec), quantity, GST-inclusive price, payment method.
2. Install date. Critical for Div 40. Depreciation generally starts not on the date you ordered the asset, but on the date the asset starts being used to produce assessable income — that is, the date the property is rented or genuinely available for rent with the asset in place.
3. Photographic evidence. Dated photos of the asset installed. These become useful supporting evidence later if any of the “repair vs replacement vs improvement” calls are reviewed.
4. Rental status of the property at the time. The same dollar of curtain spend is treated very differently depending on whether the property was tenanted (or genuinely available to rent) on the install date, or still being lived in by the owner.
5. Contract and settlement documentation. Particularly for recently purchased properties, settlement date determines whether the 2017 second-hand rule applies, and whether a given asset is “inherited Div 40 from the previous owner” or “newly installed by you after settlement”.

For landlords holding multiple properties, or those who have completed substantial renovation work, common industry practice is to engage a registered Quantity Surveyor firm to prepare a formal depreciation schedule. The schedule itemises eligible Div 43 capital works and Div 40 plant and equipment across the property, with the relevant effective lives and amounts already calculated for a tax agent to use. The cost of the schedule itself is generally deductible too, but whether it is worth commissioning, and which firm to use, are decisions to take with your tax agent before you instruct anyone.

5. A Practical Checklist for Landlords

Next time the question “can I claim these curtains” comes up, work through it in this order.

First, identify which bucket the expenditure sits in — Div 40 (plant and equipment) or Div 43 (capital works). Curtains and blinds almost always sit in Div 40.

Second, identify how the asset got there — inherited at settlement (generally blocked for new owners under the 2017 rule) or installed by you after settlement (generally depreciable over effective life).

Third, identify what kind of expenditure it is — ongoing repair (deductible in the year), full replacement of an asset (depreciable Div 40), or upgrade/improvement (treated as capital).

Fourth, gather the records — invoice, install date, photos, rental status, settlement documents.

Fifth, take all of the above to a TPB-registered tax agent for the actual call. For larger renovations or multiple properties, consider engaging a registered Quantity Surveyor to prepare a depreciation schedule before lodgement.

Sixth, bookmark the ATO’s depreciating assets in rental properties page and the ATO Residential rental properties guide as pages you check each tax season. The detail is updated periodically; last year’s version is not necessarily this year’s.

Where CAS Blinds Fits

CAS Blinds is a factory-direct window furnishing supplier — not a tax agent and not a quantity surveyor. What we can do for landlords installing curtains or blinds in an investment property is supply a properly itemised tax invoice (brand, model, dimensions, GST-inclusive price) on made-to-measure curtains and blinds; a documented install date via our professional measure and quote service where you would rather not measure or fit it yourself; and a free sample pack before ordering, so you do not end up replacing the wrong product six months later and creating extra cost and extra tax complexity. How any of that flows into a depreciation schedule is a question for your tax agent. Whether the underlying records are clean enough to support that schedule is a question for your supplier and your invoices.

Important. This article is general information, not tax advice. Each landlord’s circumstances differ and the ATO’s rules are updated periodically. Before making any claim, consult a TPB-registered tax agent and refer to the current ATO Residential rental properties guide.