Income Tax Deductions for Commercial Properties

ARE YOU LOOKING to buy a commercial property? If so, remember that you may be entitled to significant income tax deductions.

You can (and should) claim deductions for the various outlays you incur. Therefore, when you purchase a commercial property such as an office, factory or shop … don’t forget to maintained records right from the very start.

Keep track of your expenses

If the property is used for a business or is available for rent, you may claim tax deductions for expenses related to owning it – including interest on a loan to obtain the premises, plus any maintenance costs.

Understand CGT  and GST implications

Commercial properties that are used in running a business are subject to capital gains tax (CGT). You will need the records of the costs and date of buying the property, so you can calculate your capital gain (or capital loss) by the time you are selling it.

You may also be eligible to claim a credit for the goods and services tax (GST) included in the price. Furthermore, GST may also be claimed on other expenses associated with owning the property like the GST included in on-going running expenses and solicitors’ fees.

 But beware …

You may not be able to claim GST credit if the seller used the margin scheme to calculate the GST in the price. You may also not be eligible …

  • if you bought the property for someone who is not registered for GST,
  • if you bought the property as a GST-free supply, or
  • if you are not registered for GST.

Bottom Line: As a commercial property investor, you need to stay on top of your tax liabilities and entitlements. Therefore, it’s important to consult professionals in this area – who will understand and ensure you take all the necessary steps, during the time you own the property.

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.

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