Hotel Depreciation Schedule
Maximise your claim for capital allowance and depreciation from your building and assets
With a depreciation schedule a hotelier can typically claim hundreds of thousands of dollars in additional tax deductions.
Depreciation schedules for hotels and pubs
Every year hundreds of hotel owners around Australia are paying more tax than they have to because they are not claiming the maximum deductions available to them for capital allowance and depreciation of their building and assets.
Recognised as Australia’s hotel depreciation experts for freehold and leasehold entities, our specialist team will provide valuable advice at any stage of your hotel business journey, from acquisition to refurbishment, operations and sale. Call for a free consultation today.
Hotel Depreciation
When to consult a depreciation expert?
Purchasing stage
Get an accurate and detailed schedule of depreciation claimable for building and construction works and plant and equipment assets. Helpful for financial feasibility, purchase negotiations and contract inclusions.
Renovations and Refurbishment
Claim maximum immediate deductions for scrapping (asset disposal), as well as future deductions for new construction and refurbishment works with a comprehensive and detailed depreciation schedule. For best results contact us in the planning stage, or as soon as possible following commencement or completion.
Financial Performance and Compliance
Are you operating without a specialist depreciation schedule now? You could be missing out on tens of thousands of dollars in tax deductions. Give your cash flow a boost by back-claiming for deductions missed in previous years, and maximise your deductions going forward. Contact us for a free consult today.
What's Included
What does our service include?
With our expert team of quantity surveyors you’ll have all the support you need to maximise your depreciation deductions and boost your cash flow.
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Contract Review
Review of the sale contract to ensure accurate and most beneficial apportionment of agreed values for plant and equipment assets, and reconciliation against any existing inventory registers.
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Thorough inspection by a qualified assessor
A thorough inspection of the building and plant and equipment assets will be conducted to ensure a complete and accurate valuation and inventory of all depreciable assets.
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Maximum deductions for historical works
We will conduct research of historical works and estimate costs for those works to ensure deductions are maximised for the new owner going forward.
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Accelerated Depreciation
Application of accelerated depreciation rates and immediate write-off for eligible assets to ensure maximum deductions are claimed early.
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Freehold and leasehold dissection
We can ensure accurate apportionment of costs and deductions between freehold and leasehold entities to ensure compliance and best possible results.
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Ongoing expert consultation
Consult with our team over the life of your holding to access the best advice, particularly when renovating or refurbishing.
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Everything you need to know about claiming depreciation for your hotel
A hotel depreciation schedule is a comprehensive report that itemises details regarding the structure of the hotel building (total build costs, effective life, depreciation claimable), as well as the plant and equipment assets of a hotel (asset values, effective lives and annual depreciation claimable). Using this detailed report, prepared by a quantity surveyor, hotel owners can claim depreciation as a tax deduction when lodging their financials to the ATO each year. These tax deductions reduce taxable income and reduce the tax payable by the business. In short, a depreciation schedule improves the cash flow position of a hotel each year.
Both freehold and leasehold hotel owners can benefit from claiming tax deductions for the depreciation of their assets each year.
Freehold hotel owners
Freehold hotel owners typically own the structure of the hotel and the key infrastructure assets. These assets are likely to include air conditioning, hot water systems, refrigeration assets etc. Freehold owners can claim for depreciation of the building structure, and separately for any key assets they have paid for and provide within the lease.
It is not uncommon that a hotel owner may own the building in one entity and lease and operate the business in another. A depreciation schedule will be required for each entity.
Leasehold only hotel business owners
Leaseholders typically own the fit-out of the hotel (if paid for), including furniture, floor coverings bar fit-out, partition walls, poker machines etc. Leasehold owners can claim depreciation for any building works they have paid for, along with all of the plant and equipment assets they own within the establishment.
A depreciation schedule allows for hotel owners to maximise the tax deductions for depreciation available to them, and improves the cash flow of the business each year. Each year a hotel owner does not have a schedule, they are missing out on tens of thousands of tax deductions that can make a significant difference to any tax liabilities. The best time to get a report completed is straight away.
Benefits during the acquisition process
During the acquisition process, or as soon after purchase as possible is the ideal time to have a depreciation schedule completed. The process of having a depreciation schedule completed now will assist in the dissection of asset pools and the valuation of assets within the contract of sale. Having the assets valued accurately as this time can have flow on benefits for many years – read here to learn more about our advice of managing asset values versus goodwill in the contract of sale.
After any major refurbishment
This is the ideal time to have any exiting schedules reviewed to ensure assets are valued and scrapped for maximum effect, and effectively dealt with going forward. At this stage also, new acquisition works can be accurately captured and forecasted for maximum future claims.
Learn more about maximising depreciation when renovating a hotel.
Anytime if you discover you don't have a depreciation schedule, or you don't have a good one
The great news here is that even if you have been operating for some time without a quality depreciation schedule, you can back claim for tax deductions that have not been claimed in previous years (typically up to 4 years). Whilst there is some cost in having a schedule done and amending previous tax returns, we have only seen the benefits far outweigh the costs with hotel owners typically claiming tens of thousands of dollars in deductions that were previously unclaimed. This can provide an immediate cash flow boost to any business in the way of a tax refund (or applied as a credit against any ATO debts).
Pubs are unique in terms of building costs, and included industry specific assets. The build and fit-out of a hotel is very different to a residential house or a generic commercial office building.
An experienced, specialist quantity surveyor is the best person to complete a depreciation schedule for a hotel owner. A quantity surveyor will be able to estimate historical construction dates and costs, as well as value industry specific plant and equipment assets. This is particularly important within the industry as hotels undergo regular upgrades and transformations to adapt to consumer tastes and preferences. All of those historical and new works must be assessed, costed and accounted for accurately in order to maximise the tax deductions available.
Accountants are not able or qualified to cost historical building works or value plant and equipment assets.
Deductions can vary significantly, dependent upon the size and fit-out of the hotel. A smaller, regional hotel with a modest fit-out could expect to see annual deductions in the tens of thousands of dollars. A substantial CBD hotel with quality fit-out and inclusions should see tax deductions valuing hundreds of thousands of dollars across the first few financial years.
To smart hotel owners, engaging a the right quantity surveyor, a depreciation schedule is an incredible investment. A depreciation schedule for a hotel can cost from a few thousand dollars for a simpler hotel, up to around $10,000 for a substantial establishment that includes accommodation, restaurants etc.
But the return on investment is huge with most schedules reporting hundreds of thousands of dollars in deductions in just the first few years.
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Get a Free Quote for a Depreciation Report.
We’ll include an estimate of available 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.
