Frequently asked questions
Of the thousands of reports prepared, Thrifty Tax Depreciation Schedules are often for existing and second-hand properties that will encompass assessing depreciation for second-hand plant and equipment and the building, even if they’re old. The 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 are that if the property qualifies for division 43 building depreciation, you will be eligible to organise a report for depreciation claims. This is subject to standards 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 27th February 1992. If you are unsure of the build date, please contact us.
Suppose the property is purchased before 10th May 2017 (also referred to as the date of exchanging contract) and rented since 1st July 2017. In that case, you are eligible for depreciation claims 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 May 2017 that 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 contacting us.
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:
- Purchasing a second-hand property and not installing any new plant & equipment in it.
- Purchasing a brand new property and living in it (for any amount of time) before renting it out.
- Installing new items in your property while living in it before renting it out.
There is an exemption for companies that can still claim division 40 in any of these circumstances.
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 a diminishing value or prime cost schedule.
Thrifty Tax can backdate your depreciation report as far back as you need. However, you would need to reach out to your accountant to find out how far back they can amend your tax returns to claim missed years of depreciation.
Yes, you can claim tax depreciation on renovations completed by previous owners if they meet certain criteria, such as being completed after February 27, 1992. To claim tax depreciation under division 43 building depreciation, it’s important to verify the renovation date and any other relevant details. Keep in mind that you can only claim tax depreciation on the remaining value of the renovations, not on their original cost.
Yes, please use our free quote and estimate form.
Thrifty Tax Depreciation is asked this question a lot. An accountant can prepare a depreciation schedule for an investment property where all costs are provided by the builder for example, as below.
| Asset | Value |
|---|---|
| Building | $100,000 |
| 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 provided to the purchaser or investor. i.e. you may find a contract that will show $250,000 and all the items 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 can only 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:
| Building Value | $250,000 |
|---|---|
| Rate of depreciation as per division 43 | 2.5% |
| Year 1 | $250,000 x 2.5% = $6,250 |
| Year 2 | $6,250 |
| Depreciation claimed in 2 years | $12,500 |
A quantity surveyor’s depreciation schedule can be seen below based on the same scenario:
| Building Value | $180,000 |
|---|---|
| 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 can 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 when a property investor purchases an existing property with second-hand plant and equipment; a quantity surveyor can 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 on a second-hand property?
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?
No, a Thrifty Tax depreciation schedule can be used for the lifetime of the property while you use it for investment purposes.
We understand there is a lot of value in a quick call with a sales representative; however, Thrifty Tax takes a different approach. We’ve designed our website with a self-service approach in mind. With a more streamlined process, it allows us to reduce cost overhead and pass those savings onto investors through more affordable tax depreciation schedules.
This is how we can offer high-quality and high-yielding tax depreciation reports at significantly lower prices.
So despite not having a phone number for you to call, we can still ensure all your queries are addressed. Our platform provides the crucial information an investor needs regarding depreciation when purchasing and claiming deductions. It provides the necessary knowledge without overwhelming you with extraneous details. This ensures you can be confident in your decision when placing an order.
To get started, please refer to one of the quick links below:
- Get a Free Quote & Estimate
- Frequently Asked Questions
- How it Works
- Sample Report
- Order a Tax Depreciation Schedule
If your questions remain unanswered, please contact us through our contact page and fill in the form under the selection Other. We will respond roughly within 1-2 business days. Please note our operating hours are weekdays between 9 am – 5 pm.
Not at this time. However, if you have many properties (10 or more), you can use our contact form, and we will send you a spreadsheet to fill out.
Yes, we do tax depreciation for commercial properties.
Unfortunately, we do not service international properties outside of Australia. However, we service all properties within Australia, whether it be in Sydney, Melbourne, Brisbane, Adelaide, Canberra, Hobart, Gold Coast, etc., including regional areas.
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.
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.
With a streamlined service, we can 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.
If you own 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.
- Check that your property qualifies for depreciation. Check using the link below if your property is eligible. Purchasing a tax depreciation schedule will be worthwhile if your property is eligible to claim depreciation. Any accidental purchases that fail to qualify for depreciation will be refunded.
Get a Free Quote
ㅤ - Choose your package type. We offer two types of packages. The budget package is the self-assess option for investors who know exactly what is in the property and need the lowest price. You provide all the property details, and one of our quantity surveyors will review your self-generated report to ensure it is ATO-compliant.
The second option is our express package for investors who want to ensure they receive maximum deductions and don’t know all the details about their investment property. One of our quantity surveyors will prepare your ATO-compliant tax depreciation schedule by means of a desktop survey.
If you aren’t sure which package is right for you, click ‘Help me choose‘ on the order page.
ㅤ - Order your tax depreciation schedule. Fill out what details you can using our order form, including renovation costs, floor plans and/or photos. Depending on the package you choose will determine how much information you must provide.
ㅤ - Allow some time for us to prepare your schedule. We will assess the property via a desktop survey using your information and an online paid real estate database to capture as much depreciation as possible in your report.
ㅤ - Receive your report and claim deductions. Once your report is complete, we will email it to your inbox. This report will contain the tax depreciation schedule that allows you to claim depreciation on the investment property. The report is simple to use; however, we recommend sending it to your accountant to ensure you correctly claim your deductions. You will only need this one report for the lifetime of the investment property. The report is also future-proof and can be amended should you renovate your investment property.
The team at Thrifty Tax Depreciation are experts who know what property investors want and how quickly they want it. Especially during tax time! That’s why all year round, we prepare reports within 7 business days of receiving your payment. We may require more time when the information may be insufficient, but we’ll always let you know upon reviewing the information and receiving your funds.
There is also the option at checkout to choose to receive the report by the next business day.
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.
Yes, we service Australia-wide, whether it is metropolitan or rural. As we conduct desktop surveys, we can service every state of Australia: New South Wales, Queensland, Northern Territory, Western Australia, South Australia, Victoria, the Australian Capital Territory, and Tasmania.
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 cannot 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 you used for property for investment purposes.
Please note that these depreciation methods only apply where your property can claim division 40. If you are not eligible, a capital works schedule will be provided.
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).
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 of 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.
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 measured in years which is set by the ATO. This can be found within the document ‘Taxation Ruling TR 2019/5 – Income tax: effective life of depreciation assets’.
A quantity surveyor (or QS) is a building economist who specialises in providing independent advice on the cost of construction. Whether it is residential, commercial, aviation or even the 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.
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 item’s residual value for that year. If you scrap a particular item (e.g. replace a cooktop) 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.
Released on Federal Government’s Budget night in 2017, it is an integrity measure to address concerns that successive investors are depreciating some plant and equipment items above their actual value.
The Federal Government legislated new laws that affect claims to plant and equipment depreciation (see Division 40), which came into effect on the 9th of May 2017. It affects property investors who purchase residential property as individuals (Companies and managed funds are unaffected). It also affects property investors who switch their primary residence (PPOR) to an investment property after the 30th of June 2017.
Secondhand plant & equipment can no longer be claimed for residential tax depreciation. Some of the following scenarios describe where division 40 cannot be claimed:
- Purchasing a second-hand property and not installing any new plant & equipment.
- Purchasing a brand new property and living in it (for any time) before renting it out.
- Installing new items in your property while living in it before renting it out.
There is an exemption for companies that can still claim division 40 in any of these circumstances.
The legislation only affects plant and equipment, meaning that all residential properties may still claim building depreciation, otherwise known as capital works. Please contact us if you have any questions. This is great news for property investors because they can still claim depreciation.
Short Answer: Not every component of your property is depreciable.
While the building and its fixtures and fittings depreciate over time, the land itself does not. This means when you buy a property, a significant portion of its cost, attributed to the land value, is excluded from depreciation.
Furthermore, assets within your property depreciate at varying rates based on their projected useful life, as set by the Australian Taxation Office (ATO). Some items might lose value faster than others, leading to fluctuations in annual depreciation amounts. There’s also the consideration of residual value, which is an asset’s estimated worth at the end of its depreciation cycle. Depreciation captures the decline in an asset’s value from its initial cost down to this residual value, but not beyond it.
Additionally, specific costs related to your property might be immediately deductible in the year they occur rather than being spread out as depreciable amounts. As you continue to own the property, renovations and improvements can also influence its depreciable value, albeit separately from the original purchase price. Lastly, the method of depreciation calculation you choose, be it the Prime Cost or the Diminishing Value method, can result in different depreciation values over the asset’s life.
Short Answer: No.
The standard depreciation period for the building structure of residential properties, as set by the Australian Taxation Office (ATO), is 40 years (2.5% each year). For residential properties, it’s not possible to depreciate over a 25-year period. Depreciating a property over 25 years (4% a year) is only set for specific commercial or industrial properties such as manufacturing.
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:
- Purchasing a second-hand property and not installing any new plant & equipment in it.
- Purchasing a brand new property and living in it (for any amount of time) before renting it out.
- Installing new items in your property while living in it before renting it out.
There is an exemption for companies that can still claim division 40 in any of these circumstances.
If you purchased a property second-hand and installed some new items in it while the property was vacant or rented, you will be eligible to claim these costs. If your report does not show those items as claimable in your report, please reply to the email we sent you, and we will be happy to update your report at no cost.
The diminishing value method of depreciation only applies to division 40 items (e.g. lights, blinds, appliances, flooring). If your property is not eligible to claim depreciation on division 40, no diminishing value schedule will be included as there are no items to claim.
You can read more here about why you cannot claim division 40.
For any extensive work under $50,000, amending your Thrifty Tax report will be free. Where you have undertaken more major renovations, a fee of $50 (inc. GST) will be charged as there is a fair amount of work in adding those costs into your current schedule.