Capital allowance and depreciation can be substantial tax deductions for commercial property owners and tenants
Unfortunately, a large portion of business owners are not maximising their tax deductions by claiming the maximum deductions available for capital allowance and depreciation of their building and business assets. This means an unnecessary cash flow loss for the business.
So when it comes to the building, the fit-out and the assets, who can claim depreciation for what?
The property owner is entitled to claim depreciation for Division 43 works (capital works) that they have paid for. This includes the building, and structural/built additions, and includes newly built or upgraded bathrooms, kitchens, outdoor areas etc.
Also claimable are any Division 40 assets they have paid for and included as part of the tenancy agreement.
Tenants are more likely to be claiming depreciation for the building fit-out (if they paid for it), as well as machinery, furniture and electrical assets.
For example, a cafe/restaurant business owner is likely to be claiming depreciation for the internal fit-out, fridges, bar and counter, tables, chairs, styling assets etc.
An office based or medical business will likely be claiming for partition walls, flooring, window dressings, reception counters, furniture, lunchroom fit-out, styling assets etc.
In order to effectively maximise the capital works and depreciation deductions available to both commercial landlords and tenants it is essential to engage the services of a professional quantity surveyor to process both the known and unknown costs.
A specialist quantity surveyor will dissect the historical construction costs, including building improvements and additions and estimate costs where information is not available.
A quantity surveyor will also review the contract of sale and tenancy contracts to ensure building works and assets are accurately allocated between entities.
Assessment of commercial buildings for capital allowances and depreciation is best managed by an expert. Our commercial division is led by Director Mark Wilkins. Mark has been involved in the construction industry for over 20 years and has specialised in the niche area of commercial building depreciation since 1999. Our professional team has extensive experience assessing all types of commercial properties from small industrial units to golf courses, aged care facilities, restaurants, retail manufacturing and rural properties. In recent years we have developed niche skills in assessing and reporting in the hospitality, child care and dental/medical industries.
To discuss how depreciation can benefit you as a commercial property owner or leasee, get in touch with our expert team today for a free consultation – email Alex our Senior Tax Depreciation Specialist at firstname.lastname@example.org or call us on 1300 922 220. We are also happy to review existing depreciation schedules and provide advice as to whether they are effectively maximising your position.
Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.View all posts by Mark Wilkins