As a commercial property owner or a commercial tenant, you can benefit by claiming tax deductions for commercial property depreciation.
Whether you’re collecting or paying rent, a tax depreciation schedule should form part of your business planning. A commercial property depreciation schedule will list tax deductions you can claim for depreciation of capital works and the wear and tear of plant and equipment.
Capital works include the actual building: bricks and mortar, walls, wiring, floors and other permanently fixed items.
Plant and equipment covers items that have been installed within the building, such as furniture, shelving, appliances, bathroom fittings, air conditioners, carpets & floor coverings, window coverings and any specialist equipment required to do business.
So who can claim what?
Commercial Property Owners
A commercial property owner can claim a depreciation deduction for capital works – the structural elements of a premises – with the amount depending on the property’s age and value.
An owner can also claim a depreciation deduction for plant and equipment they have purchased and/or installed.
Commercial Property Tenants
A commercial tenant can claim a depreciation deduction for items they have purchased and installed within the building.
A tenant may also be able to claim a deduction for “scrapping” when vacating a commercial property, particularly if they are required to return the property to its original condition at the end of a lease.
How much can I claim?
A tax depreciation schedule will itemise yearly deductions claimable for the life of the building (up to 40 years). The ATO requires that a registered Quantity Surveyor inspects your premises and completes a tax depreciation schedule that can be forwarded directly to your accountant or financial planner.
A tax depreciation schedule is a must to ensure you’re claiming every depreciation deduction you’re entitled to. Maximising tax deductions means more money in your pocket at tax time – something that’s sure to appeal if you’re leasing a business premises, or if you own the building.