Frequently Asked Questions (FAQs)

Frequently Asked Questions (FAQs)

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 from just $200.

Below is a list of our frequently asked questions (FAQs) by previous clients. If your question is not answered, please use the form at the bottom of the page for us to ensure you have the peace of mind before ordering a tax depreciation schedule.

Top 5 Questions

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.

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.

    1. Make sure your property is eligible to claim for depreciation, click here to use our form if you are not sure. Once the property is eligible to claim, it will be worthwhile to complete the report, (If you are still uncertain, we will refund any orders that do not qualify for depreciation).
    2. Use our order form to purchase your report. Please provide any details regarding renovation costs, floor plans or photos if you have any.
    3. We will assess the property via a desktop survey using all information provided by yourself and online real estate paid database software to capture as much depreciation as possible in your report.
    4. Once payment has cleared and your report has been written, we will email your report to you and your accountant. This report will have the schedule that allows you claim depreciation on the investment property. The report is designed with advice from accountants and is therefore easy to read. You will only need this one report for the lifetime of the investment property.

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 are not sure, click below to discover if your property qualifies for depreciation.

Check Eligibility
Click here to receive a quote

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 Depreciation Form, 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.

Tax Depreciation

Thrifty tax reports include both methods available for depreciation:

  • 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. Click here to view our sample report.

 

Plant & equipment (division 40) items beginning (first year) with a value of $300 or less qualify for an immediate full deduction.

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 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 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’.

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.

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?

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.

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.

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.

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 24 hours 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.

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.

    1. Make sure your property is eligible to claim for depreciation, click here to use our form if you are not sure. Once the property is eligible to claim, it will be worthwhile to complete the report, (If you are still uncertain, we will refund any orders that do not qualify for depreciation).
    2. Use our order form to purchase your report. Please provide any details regarding renovation costs, floor plans or photos if you have any.
    3. We will assess the property via a desktop survey using all information provided by yourself and online real estate paid database software to capture as much depreciation as possible in your report.
    4. Once payment has cleared and your report has been written, we will email your report to you and your accountant. This report will have the schedule that allows you claim depreciation on the investment property. The report is designed with advice from accountants and is therefore easy to read. You will only need this one report for the lifetime of the investment property.

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 are not sure, click below to discover if your property qualifies for depreciation.

Check Eligibility

No, a Thrifty Tax depreciation schedule can be used for the lifetime of the property while you use it for investment purposes.

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?

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.

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Asset Value
Building $100,000
Oven – Miele H series 2860 $3,200
Air-conditioning unit 2.5kW Panasonic $1,200
[/fusion_table]

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 (Read more here about why do I need a quantity surveyor to assess for depreciation?).

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:

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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
[/fusion_table]

A quantity surveyor’s depreciation schedule can be seen as below based on the same scenario:

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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
[/fusion_table]

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!

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 Depreciation Form, 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.

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

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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? Reports starting from $200 for any property in Australia. We only achieve this by having properly qualified persons dedicated on just tax depreciation work.

Thrifty tax reports include both methods available for depreciation:

  • 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. Click here to view our sample report.

 

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 from just $200.

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, request a guarantee for your investment property by clicking here and we will provide you with a guarantee on deductions that your schedule must hit or your report will be free.

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.

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