Frequently Asked Questions

Can’t my accountant prepare my depreciation schedule?

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.

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 432.5%
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 432.5%
Rate of depreciation for air-con, carpets etc10-15%
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?

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