Depreciation Differences: Part 2


Commercial Vs Residential Property.

LAST WEEK, we covered the different types of Depreciation and the depreciation rules for tenants in Commercial properties.

Read on now, for the rules for claiming occupancy in a Commercial/Residential property — plus another useful tip, when it comes to when claiming deprecation.

Occupying the Property

Legislation from the ATO states that a residential property owner cannot claim depreciation for a building they themselves solely occupy. They can only claim depreciation on a building producing income.

In a commercial property however, there are ways in which you can occupy the investment property and still be able to claim depreciation.

For example, if the property is purchased by a company or a trust, the owner may still be able to occupy the premises as a tenant and claim property depreciation.

It is also worth mentioning that the ownership structure can have an impact on what marginal tax rate when making a depreciation claim.

Consult with a Depreciation Expert

No matter what type of property an investor chooses to buy, it is recommended they contact a specialist Quantity Surveyor for further advice on the depreciation that may apply to their building.

A Quantity Surveyor will arrange a site inspection, take measurements and estimate the structural costs as well as assess what plant and equipment items the building contains.

They will then provide a tax depreciation schedule outlining all of the depreciation deductions available for the property owner’s annual tax assessment.

BOTTOM LINE: Consult with a depreciation specialist to ensure that you are claiming all that you are entitled to — because more often than not, you will be selling yourself short … by not claiming everything you’re entitled to.


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