Making commercial depreciation work for you at tax time

Many tenants and property owners are not even aware of the depreciation benefits that they are able to claim during tax time on their commercial property. An office building, hotel or warehouse all offer different opportunities and complexities for tax depreciation. 

By recognising the differing depreciable items within any given commercial property, our team here at Glance are able to advise, support and guide you in developing a comprehensive ATO approved tax depreciation schedule that you can use to maximise your tax return.

Take a look at some of these concepts designed to support owners and tenants during tax time to understand the potential depreciation benefits that a commercial property may provide. 

1. There are two separate divisions that commercial property depreciation can be claimed under: Capital Works and Plant and Equipment. 

Capital works refers to the building structure and permanently fixed assets and Plant and Equipment considers all fittings and fixtures that are easily removed. 

2. Depreciation deductions are available to old or new commercial properties. 

It is worthwhile to ask prior to purchasing a property whether previous tax depreciation has been claimed or not. Also, if the property has been built prior to 20th July 1982, it is important to ask whether deductions are available on the property. Anything built after this date automatically qualifies. 

3. Take note of the recently introduced government incentive that may allow you to instantly write off an asset’s cost as a tax deduction. 

Plant and equipment assets purchased between 6th October 2020 and 1st July 2023 are included in this incentive.

4. Both owners and tenants can claim depreciation. 

Property owners are able to claim deductions if the property is leased or on the market for lease. This is particularly important now that many commercial properties remain untenanted due to the Covid-19 economic impact. 

Those individuals who both own and occupy their commercial property can claim depreciation as well, which differs from residential laws which prevent people in such situations from doing so. 

If you are interested in understanding more about a commercial property’s potential depreciation and how to claim for this during tax time, then do get in touch with one of our professional team members here at Glance Consultants to talk through your situation and receive relevant advice and guidance.

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