Are You Fully Claiming the Depreciation Available on Your Commercial Property?

Depreciation can provide you with substantial Tax BenefitsIN SIMPLE terms, your Depreciation falls under two separate (but related) categories:

  • Plant & Equipment items (Division 40)
  • Capital Works allowance (Division 43)

And not everyone is in a position to acquire a stand-alone property.

More often than not, you’ll be looking to purchase a “strata-title” Office or Warehouse — involving an Owners Corporation and some common-area property.

As such, you may not be aware of the full extent of what you are entitled to, by way of your Depreciation claims.

However, by having a tax depreciation schedule professionally prepared, you can significantly enhance the overall return on your investment.

Plant & Equipment items

Apart from what may be included inside your Unit, you are able to claim your pro-rata share of the common-area items as well. Things like the … lifts, lighting, fire protection, security system, air conditioning, gym equipment (including any pool & spa equipment) and so on.

Capital Works allowance

Again, quite apart from the structural components of your own Unit … you are entitled to also claim your share of the common-area capital items as well.

These will include the … driveways, car park areas, foyers, stairwells, barbecue areas, common area communities (like the gym, etc) and fixed landscaping.

Depending upon the year of construction, this allowance would be spread over either 25 or 40 years.

In any event, the proportion of your claim is based upon your “Unit Entitlement” as specified on the strata plan itself.

Your 1st step is to engage a Land Surveyor to thoroughly inspect the common area items. From there, a detailed schedule of your entitlements is drawn up — for your accountant to prepare the year-end claim for your Depreciation.

Bottom Line: Clearly, you need to seek professional advice to ensure you are claiming your full entitlement — and thereby, leaving nothing on the table.

However, there is still one vital step you need to take at the time you acquire each new property. And this relates to knowing how to correctly structure of the Contract of Sale — in order to maximise your Depreciation claim, for Commercial property.

But that’s a discussion for another day.


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