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If you’re leasing a commercial property, you might be missing out on a powerful tax benefit: depreciation on your leasehold improvements and fit-out. Even if you don’t own the building, you can still claim substantial deductions on the assets and improvements you’ve installed, or have acquired in purchasing a business within a leased property.

💡 What Is Commercial Leasehold Depreciation?

Commercial leasehold depreciation refers to the tax deductions available for tenants who invest in fit-outs and improvements within leased premises. These can include:

Partition walls, counters, and desks
Carpeting, blinds, and paint
Kitchens, cabling, and lighting
Air conditioning and security systems

These assets fall under either Division 40 (Plant and Equipment) or Division 43 (Capital Works) and can be depreciated over time—or even written off immediately under certain conditions.

🛠️ Claiming Depreciation on Your Fit-Out

As a tenant, any capital improvements you make to the leased space are considered depreciable assets. You can claim:

Annual depreciation on eligible assets
Immediate deductions for scrapped assets when vacating
Transfer of depreciation benefits to landlords or new tenants

For example, if you install a kitchen and later remove it when vacating, you may be eligible to claim the residual value as an immediate deduction—provided the assets are properly valued by a qualified quantity surveyor.

🔁 Buying or Selling a Business in a Leased Premises?

If you’re purchasing a business that operates from a leased commercial space, you may inherit the right to claim depreciation on the existing fit-out. Similarly, if your lease ends and the landlord retains your improvements, they may continue claiming depreciation—so it’s essential to understand your lease terms.

📊 Case Study: Brisbane Office Fit-Out

A professional services firm leased an office in Brisbane CBD and completed a $583,762 fit-out. Highlights include:

Division 43 Capital Works: Kitchen, partition walls, cabling ($221,458)
Division 40 Assets: Furniture, equipment, and pooled assets ($362,304)
Immediate write-offs: Assets under $30,000 claimed in full in Year 1 (in accordance with the Small Business Income Tax Laws available at the time)
First Year Depreciation Total: $329,459 in deductions
10-Year Depreciation Total: $411,648 in deductions
40-Year Depreciation Total: $583,762 in deductions

All deductions were itemised and forecast for the full 40 years in a Commercial Depreciation Schedule for a report fee under $2,000—delivered by Capital Claims Tax Depreciation.

📞 Get Expert Help with Your Commercial Depreciation Schedule

To unlock the full value of your leasehold improvements, you need a tailored commercial tax depreciation schedule. Our team at Capital Claims Tax Depreciation specialises in:

Site inspections and asset identification
Construction cost estimation and valuation
Accurate depreciation forecasting over 40 years
Compliance with ATO guidelines

📧 Contact Alex, our commercial property expert with 20+ years of experience, at alexk@capitalclaims.com.au or call 1300 922 220.

❓ FAQs About Leasehold Fit-Out Depreciation

What is a fit-out in a lease?
A fit-out includes all fixtures and fittings installed by the tenant to make the space functional—like flooring, partitions, and cabling.

Can tenants claim depreciation?
Yes. Tenants can claim depreciation on both Division 40 and Division 43 assets they install in leased premises.

What happens when the lease ends?
You may be able to claim the residual value of scrapped assets or transfer depreciation benefits to the landlord.

🚀 Ready to Maximise Your Tax Deductions?

Don’t leave money on the table. Get a free quote for your commercial depreciation schedule today. If we can’t guarantee a strong result, there’s no cost to you.

Request Your Free Commercial Depreciation Schedule Quote