Both landlords and lessees of commercial property have the opportunity to increase cash flow and return on investment by claiming substantial tax deductions for the capital works and depreciation of their building, fit-out and business assets.
Whilst most commercial property owners and lessees are aware that they can claim deductions for business expenses such as insurance, cleaning and interest on a loan, our experience shows that many commercial property and business owners are underclaiming for building and asset depreciation and some are failing to claim these massive deductions at all.
Below you will see our example of Newcastle cafe operators who claimed over $169,000 in depreciation deductions, as leaseholders, in their first full financial year of business operation.
Deductions for Commercial Property Building Owners
Owning a commercial building can generate substantial tax deductions for its owners who can claim under Division 43 for capital allowance and depreciation of the building and under Division 40 for any included plant and equipment assets.
Deductions for Commercial Property Leaseholders
Leaseholders are eligible to claim under Division 43 for capital allowance and depreciation of structural additions or improvements made to a building, as well as under Division 40 for plant and equipment assets they paid for and installed.
Case Study
The cafe owners leased an existing Newcastle commercial property that was used as a shop front in March 2024 completed a fit-out valued at $625,405 and transformed the commercial property into a bustling café!
The fit-out was broken down into:
Division 43 capital works which included a new kitchen, walls, flooring and cabling. Total construction cost of $352,115
Division 40 assets which totalled $273,290 (Diminishing Value + Pooling) and include:
The Income Tax Laws for small businesses at the time this fit-out was completed, allowed our clients to qualify as a small business (less than $10 million in turnover), and so all individual assets valued at $20,000 (ex GST) or less were eligible for immediate write-off in the first year.
Our clients are entitled to claim depreciation deductions for Division 43 capital works and Division 40 assets, totalling $169,551 in their first year, $315,851 over five years, and an impressive $625,405 over the life of the report 40-years.
We achieved these substantial depreciation results by conducting a thorough site inspection, identifying all depreciable assets, valuing assets where costs were unavailable.
‘We were amazed at the depreciation claims we could make for our café. It gave our cash flow a much-needed boost and eased some of the stress of running the business. We highly recommend Capital Claims and are thrilled with the results!’ – Rusty and Camilla Cafe Owners.
How do I claim for my commercial depreciation deduction?
The methodologies used for calculating capital allowances and tax depreciation for commercial properties can be vastly different and often complex compared to residential.
Capital Claims Tax Depreciation has extensive specialist experience assessing and reporting on commercial properties of all types, specifically hotels and accommodation, child-care centres, aged care facilities, and professional office space.
“Whilst the ATO does prescribe effective lives for commercial assets, quantity surveyors are qualified to revalue assets and ascribe new effective lives each time an asset changes hands. This means that a quantity surveyor is able to value an asset based on its actual condition and future use and attribute new values and effective lives, potentially increasing your tax deductions for depreciation and immediate write-off.” Mark Wilkins, Director – Capital Claims Tax Depreciation.
To maximise your deductions and help you with cash flow claim your depreciation deduction today! Call and speak to either Mark Wilkins or Alex Konjarski who are our commercial property experts on 1300 922 220. Together they have over 40 years combined depreciation knowledge and experience and deliver maximum results for owners or lessees of commercial property.
Get a Free Quote for a Depreciation Schedule.
We’ll include an estimate of your potential deductions, and if we can’t guarantee a strong result, we’ll let you know up front and there will be no cost to you.