When you work in trades and construction, you are often helping create value long before a property owner sees the financial upside. A renovation, fit-out, extension or granny flat is not just a physical improvement. In the right context, it can also change how that property performs from a tax and cash flow point of view. That is why I wanted to have this conversation on Built. Trusted. Chosen.
In this episode, I spoke with Jarrel Dugay from Duo Tax about tax depreciation, how it works, and why it matters for people operating around investment properties. This was especially useful for builders, renovators and trades businesses because the better you understand what an investor may be able to claim, the better positioned you are to frame your work, explain value, and have more commercially aware conversations.
New builds usually create the clearest depreciation upside
One of the clearest points from the conversation was that new builds generally offer more depreciation opportunities. Jarrel explained that a depreciation schedule is built from the construction cost of the property and typically looks at two buckets: plant and equipment, and capital works. In practical terms, that means a newer property often gives the owner more to work with from day one.
For trades and construction leaders, that matters because clients buying new or recently completed stock may already be thinking beyond the build quality alone. They may also be weighing up the financial efficiency of the asset. If you understand that lens, your conversations become more strategic.
Older properties are not automatically out of the game
A big myth Jarrel challenged was the idea that if a property was built in the 1980s or 1990s, there is nothing left to claim. He made the point that while the original structure may no longer offer the same depreciation benefit, later renovations can still create claimable value. He gave examples like painting, new floorboards, kitchens and bathrooms, and even renovations completed by previous owners.
This is important for anyone quoting renovation work. The age of the original house is not the whole story. A tired old property can still have meaningful tax value sitting inside more recent improvements. That gives you another way to help clients understand why quality upgrades matter.
Second-hand items and structural improvements are treated very differently
One of the most practical parts of the conversation was the distinction between second-hand plant and equipment and changes to the original infrastructure. Jarrel explained that items installed by a previous owner may not be directly claimable in the same way. But structural works and renovations tied to the building itself are a different story.
That distinction matters on real projects. If your work is changing the building itself rather than simply passing on second-hand items, the client may be in a much stronger position. This is exactly the kind of nuance that helps a contractor talk more credibly with an investor client.
Replacing old assets can unlock a better long-term position
We also discussed a useful scenario around a broken air conditioner being replaced during a sale. Jarrel’s explanation was practical: if that unit was installed by the previous owner, it may be treated as second-hand plant and equipment. But if the new owner scraps it and installs a new unit themselves, that new asset may become depreciable, while the old one may sit within a capital loss schedule.
This is where better commercial thinking can shape better project decisions. Sometimes the smartest move is not just to accept what is there. It is to understand whether replacement creates a better long-term financial outcome.
Depreciation is really a cash flow conversation
Another strong point from the episode was that depreciation is not just an accounting detail. Jarrel framed it as one of the biggest levers available to help offset negative gearing and improve cash flow. He explained that once the report is done, the owner hands it to their accountant and can continue using it over the life of the schedule, with the report itself being a one-off cost.
That matters because many investor decisions are cash flow decisions dressed up as construction decisions. If your work helps improve a property and the owner also understands the tax implications, that project can feel more viable and more valuable.
Compliance beats clever shortcuts
One of the most useful closing themes was around compliance. Jarrel was clear that maximising deductions is only worthwhile if the report stands up. He spoke about ATO compliance, the risk of over-claiming, and the peace of mind that comes from having a specialist review what is actually eligible. That point matters. It is not worth chasing a few extra dollars if it creates bigger problems later.
That is a lesson that applies well beyond tax. In trades and construction, shortcuts often look attractive in the moment and expensive in hindsight. Credibility is built when the work is done properly.
Next step
The big takeaway from this conversation is simple: if you work around investment properties, understanding tax depreciation helps you speak the client’s language more effectively. You do not need to become the expert yourself, but knowing how renovations, replacements and compliance affect the bigger financial picture can make your proposals stronger and your advice more valuable.
Jarrel Dugay is part of the team at Duo Tax, an Australian firm specialising in tax depreciation schedules for property investors, along with property valuation services for tax-related purposes. Duo Tax services clients across Australia and works across residential, commercial and specialised property types
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