Thrifty Tax Depreciation are experts in assessing for depreciation. Our favourite type of property is one that would seem to yield little to no depreciation but upon review using the Thrifty Tax estimate calculator, we have gone on to save our clients tens of thousands of dollars over the years of property ownership!
Where a property is second-hand and the previous owner has renovated the property prior to selling, the ATO will allow you to claim depreciation on the building. If the property is one that is purchased prior to the 9th of May 2017, plant and equipment is also claimable, condition that is a rental property since 1st July 2017 to date. If it is purchased after the 9th of May 2017, you will be eligible to claim building depreciation or capital works only. It is wise to note that building depreciation represents 80-90% of construction costs so that you are not losing a whole lot even with the legislation changes. It is worth noting that depreciation claims to plant and equipment on properties that are second-hand but have undergone substantial renovations. See what is a substantial renovations for more information and if applies to you.
To keep our depreciation schedule costs low, we have a streamlined service with a wealth of information to inform and educate investors regarding depreciation. Unfortunately, that means we do not have phone services. Instead, we provide an extensive frequently asked questions section.
The whole tax depreciation schedule order process is laid out on our order page.
If you are not sure if you can claim depreciation, please use our property eligibility form here.
If you want to know how much you are likely to receive in tax deductions, you can request this via our estimate page.
Still have unanswered questions? use our contact form and we will get back to you as soon as possible. Keep note our working hours are 9am – 5pm weekdays.
Not every investment property qualifies for depreciation. This can leave investors unsure if they should proceed with purchasing a depreciation schedule. However, if asked a few simple questions, this uncertainty can be put to rest. The largest factors as to whether investors can claim depreciation is whether the property was built before or after September 1987 and whether the property is brand new or second-hand.
If you have purchased a rental property, you may be eligible to claim depreciation on the wear and tear of the building each financial year that you continue to rent it out. To claim depreciation you will need a tax depreciation schedule which thrifty tax can provide, below outlines the process to ensure it will be worth your money and time.
A Thrifty Tax Depreciation Schedule captures the wear and tear of building and its components known as plant and equipment or fixtures and fittings. The building is referred in the Income Tax Assessment Act of 1997 as Division 43. The plant and equipment assets is referred to in the act as Division 40 which is the calculation of decline in value of items such as oven, rangehood, carpet or ceiling fans. The schedule is therefore made up of these two parts to allow you as the tax payer to maximise your deductions and ultimately bring you a better tax return. The list of plant and equipment is also itemised to allow investors to scrap assets that are removed or demolished from the property.
Due to legislation changes in 2017, plant & equipment (division 40 - e.g. lights, blinds, appliances, flooring) can no longer be claimed in every scenario. Essentially, second-hand plant & equipment can no longer be claimed for residential tax depreciation. Some of the following scenarios describe where division 40 cannot be claimed:
If you purchased a second-hand property to rent out and install new plant & equipment such as carpet or new appliances, then only those new items will be claimable for tax depreciation. The old items will be excluded from the depreciation report.
In such cases where division 40 cannot be claimed, you still may be eligible to claim division 43 (capital works) and so it still may be worthwhile obtaining a Thrifty Tax depreciation schedule. If you receive a report where no division 40 can be claimed, your report will include a capital works schedule instead of diminishing value or prime cost schedule.
Plant & equipment (division 40) items beginning (first year) with a value of $300 or less qualify for an immediate full deduction.
Of the thousands of reports prepared, Thrifty Tax Depreciation Schedules are often for properties that are existing which will encompass assessing depreciation for second-hand plant and equipment as well as the building, even if they’re old. Good news is that the ATO will allow property investors to claim thousands of dollars even on second-hand properties.
For residential property investors of second-hand properties, the criteria is that if the property qualifies for division 43 building depreciation, then you will be eligible to organise a report for depreciation claims. This is subject to criteria of division 43 which allows investors to claim building depreciation for properties built after 15th September 1987 or renovations to the property were completed after from 27th February 1992. If you are unsure of the build date, please use our Thrifty Address Check form.
If the property is purchased before the 10th of May 2017 (also referred to as date of exchanging contract) and rented since 1st of July 2017, you are eligible to claims of depreciation to the plant and equipment referred to as division 40 of the ITAA 97. See Division 40 for more information.
For properties purchased after 9th of May 2017 who are not eligible for plant and equipment depreciation or building depreciation, investors may have Thrifty Tax Depreciation check for renovations that may have been completed and unsighted by using the Thrifty Address Check form.
For more information about the 9th of May 2017 Legislative Changes to depreciation, please see Legislated Budget Changes to tax depreciation.
Thrifty Tax Depreciation is asked this question a lot. An accountant is able to prepare a depreciation schedule for an investment property where all costs are provided by the builder for example as below.
|Oven – Miele H series 2860||$3,200|
|Air-conditioning unit 2.5kW Panasonic||$1,200|
The trouble is that all new builds do not always come with a complete asset breakdown as below and the Building Contract is often shown as a ‘lump-sum’ cost that is provided to the purchaser or investor. i.e. you may find a contract that will show $250,000 and show all the items that are included but without value. Where Thrifty Tax Depreciation can help is that we can estimate the cost of each asset as per our legal capabilities as set out by the ATO.
Shown below is the benefit of a quantity surveyor over an accountant. An accountant will only be able to provide a limited rate of depreciation of 2.5% on the whole building contract as per division 43 as no asset values are provided to the accountant.
For example, if the building contract shown is $250,000.00, then the accountant will depreciate your rental property as follows:
|Rate of depreciation as per division 43||2.5%|
|Year 1||$250,000 x 2.5% = $6,250|
|Depreciation claimed in 2 years||$12,500|
A quantity surveyor’s depreciation schedule can be seen as below based on the same scenario:
|Rate of depreciation as per division 43||2.5%|
|Rate of depreciation for air-con, carpets etc||10-15%|
|Year 1: building||$180,000 x 2.5% = $4,500|
|Year 1: plant and equipment||$7,000|
|Year 1: total depreciation||$11,500|
|Year 2: building||$4,500|
|Year 2: plant and equipment||$5,500|
|Year 2: total depreciation||$10,000|
|Depreciation claimed in 2 years||$21,500|
As you can see, a Thrifty Tax Depreciation Schedule prepared for a rental property that costs $250,000 to build will yield $21,500 more in depreciation a report prepared by an accountant where a standard Building Contract is provided. The clear advantage that Thrifty Tax Depreciation has is that it is able to value the plant and equipment in a rental property by professional assessment; something that is not legally achievable by an accountant.
The case is also similar where a property investor purchases an existing property with second-hand plant and equipment, a quantity surveyor will be able to assess for depreciation for old assets regardless of age. We have completed tax depreciation schedules for clients with properties as old as 1965. See ‘Can I claim depreciation an existing property? Order your report today!
A quantity surveyor is recognised by the ATO as suitably qualified persons to legally value and determine the construction cost of your rental property and plant and equipment. Thrifty Tax Depreciation use data from thousands of previous depreciation schedules that we have prepared for other investors to bring you the highest possible tax deduction that you can claim. This includes property investors with newly built, second-hand properties and even minor-renovated properties.
Thrifty Tax Depreciation are a group of property investors with a passion in property and have evolved to become qualified tax agents and quantity surveyors. Understanding what you as a property investor like us requires, means that we are able to yield the best tax deductions possible by assessing every square metre of your property in thorough detail. This is what sets Thrifty Tax Depreciation apart from other providers and even your accountant! Read more about Can my accountant provide me with a depreciation schedule?
Before you demolish and destroy any existing plant and equipment or structural elements of the property such as an old kitchen and appliances, check with us to see if there is any residual value worth writing off as a loss. Most often we find lots of deductions that can be claimed immediately that financial year.
Released on Federal Government’s Budget night in 2017, it is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value.
The Federal Government legislated new laws that affect claims to depreciation of plant and equipment (see Division 40) which come into effect from 9th of May 2017. It affects property investors whom purchase a residential property as an individual (not company or managed fund). It also affects property investors who switch their primary place of residence (PPOR) to an investment property after the 30th of June 2017.
The legislation only affects plant and equipment which means that all residential properties may still claim building depreciation or otherwise known as capital works. Please refer to Thrifty Address Check Form. This is great news for property investors as it means they are still able to claim depreciation.
No, a Thrifty Tax depreciation schedule can be used for the lifetime of the property while you use it for investment purposes.
The capital loss schedule includes all the items in your property that are no longer eligible to be claimed for depreciation. They can, however, be claimed as a capital loss if you scrap them. If your report includes a capital loss schedule, those items are still depreciating, so each column represents an items residual value for that year. If you scrap a particular item (e.g. replace a cook-top) with a brand new item, the residual value of the original item in that year can be claimed in full as a capital loss. This may be used to offset a capital gain, however, it is best to contact your tax agent for advice on how to treat capital losses.
A quantity surveyor (or QS) is a building economist that specialises in providing independent advice on the cost of construction. Whether it is residential, commercial, aviation or even mining sector. Knowing the cost of materials and labour in construction, allows the Australian Tax Office to recognise quantity surveyors as suitably qualified personnel to assess for depreciation in residential properties as part of the ATO’s taxation ruling TR97/25 Paragraph 28. Read more here about why do I need a quantity surveyor to assess for depreciation?
Division 40 refers to the plant and equipment items made up of fixtures and fittings, usually known to be easily removable assets. Each item has an effective life that is measured in years which is set out by the ATO. This can be found within the document ‘Taxation Ruling TR 2019/5 – Income tax: effective life of depreciation assets’.
Division 40 is not claimable in every scenario, click here to find out where it isn't.
Division 43 (Capital works deductions) refers to the depreciation of the structure of the building, usually objects that are irremovable. Capital Works may also be known as Building Write-Off or Capital Works Allowance. Residential properties built after the 15th September 1987 are eligible to claim capital works deductions over a 40-year period which will be depreciated as a straight line at 2.5% per annum. When construction costs are unknown, a qualified specialist such as a Quantity Surveyor will be responsible for estimating the building.
Plant & equipment (division 40) items with a value of $1,000 or less in any financial year will enter the low value pool where the tax deduction rate for that item will become either 18.75% (for the first year) or 37.5% (subsequent years).
Thrifty tax reports include both methods available for depreciation where division 40 can be claimed:
• Diminishing Value
• Prime Cost
You can use either method of depreciation, however, you are unable to switch methods once you have begun claiming depreciation. You must stick to the method chosen. Our schedules reveal the two elements between division 40 and division 43. The ‘total depreciation’ column contains the total amount of depreciation you are eligible to claim for each financial year that you used to property for investment purposes.
Please note that these methods of depreciation only apply where your property is eligible to claim division 40. If you are not eligible, a capital works schedule will be provided. Click here to read more about why may not be able to claim division 40.
All reports are governed by the Tax Practitioners Board for Registered Tax Agents which essentially means that when each quantity surveyor is reviewing the same property, all construction costs must be the same and cannot deviate too far, after all it is the same building! The only difference with Thrifty Tax Depreciation is we’re much faster and much more affordable!
No, Thrifty Tax specialises in residential tax depreciation. We recommend you reach out to another quantity surveyor if you need a tax depreciation schedule for a commercial property.
Thrifty Tax Depreciation are a well-oiled engine of experts that know what property investors want and how quickly that want it. Especially tax time! That’s why all year round, we prepare reports in a fast and efficient 1-3 business days from the time we receive your payment. Where we may require more time is when the information may be insufficient, but we’ll always let you know upon reviewing the information and having received your funds.
Yes, we can match (or potentially even exceed) any guarantees provided by other quantity surveyors once we have been provided with property address and confirmed the guarantee is legitimate.
With a streamlined service, we are able to assess your property using floor plans, photos and other documents to maximise your depreciation for your investment property. Should you not be confident that you are receiving a quality report, view our sample report here or use our property tax depreciation calculator.
Yes, we service Australia wide no matter whether it is metropolitan or rural. Our data bank of property information and construction cost rates our partners have accumulated over the years means that we are able to provide you with an accurate report that is the most aggressive in deductions as possible.
With over 20 years of experience in advising tax depreciation to accountants and property investors, Thrifty Tax Depreciation have all the know how to provide the maximum tax depreciation which is now made available to you.
Because we know that investing is all about cashflow and counting those dollars and cents to making sure the investment property works for you, we provide the lowest fee possible for a tax depreciation schedule in Australia starting from $220.
Thrifty Tax Depreciation has over 20 years collectively in professional experience as not only Quantity Surveyors but as property investors. Our journey started out as property investors trying to get ahead with leveraging on all the tools available whether it was lending solutions or tax incentives. We stumbled across tax depreciation along our journey to realise how much of a difference tax depreciation on rental properties would save us in tax.
When preparing reports for Thrifty Tax Depreciation clients, we always have front of mind that the benefit of our service is to maximise that tax back so that you can get ahead. As experience quantity surveyors, we assess each square metre of your property for depreciable value by reviewing the type of floor finishes all the way through to the height of the building. Over time we have become such streamlined quantity surveyors that we are able to prepare such reports overnight. That’s right! From receipt of payment, we prepare your report in 24 hours.
Did we mention we are currently offering one of the most competitive rates on the market? Residential reports starting from $220 for any property in Australia. We only achieve this by having properly qualified persons dedicated on just tax depreciation work.