The Form of Capital Deduction that Works

When looking through a commercial property most individuals have a clear idea in mind about what they would like to transform, change or update. Make sure your dreams are realistic and within the total price of what you can afford to spend. Especially when it comes to repairs that will need to be considered well before you work on the aesthetics of your new commercial space. Where do you need to focus your attention when it comes to the important step of inspecting a commercial property? There are a plethora of do’s and don’ts when it comes to commercial property depreciation, purchasing or leasing and they all start with the property inspection. How can you ensure that your new commercial space is the perfect place for your business or to invest? As a commercial tenant, when you first sign a lease, you will often need to spend a substantial amount of money installing assets and fitting out the new space before you can open the doors for business.

You might need to install a security system to keep the items you have for sale safe, partitioning may be required for offices or meeting and consultation rooms, a kitchen area might be required for lunch breaks and signage might be needed for the shop front. Though businesses owners commonly install these and many other assets, they are often unaware they are entitled to claim them as a commercial property depreciation in the form of depreciation. As a building gets older and items within its age, they depreciate. The Australian Taxation Office (ATO) recognizes this and allows commercial building owners and tenants to claim deductions for the wear and tear on buildings and the fixtures and fittings within. Depreciation can be claimed in two ways; as a capital works deduction for the decline of the building structure, and as deduction for the depreciation of all plant and equipment items contained within the property. Some lease conditions also mandate that tenants must return the property to its original condition once a lease expires.

If a commercial tenant removes or disposes of any assets, a commercial property depreciation schedule can help show the value of the items being scrapped. Tenants are then able to write-off these items as an immediate tax deduction in the year the asset is removed for any remaining depreciable value. Considering you are looking at a commercial space it’s likely that you or your potential tenant will have invested in a pile of expensive equipment. Ensuring that the new space you are looking at has security to keep materials safe is a no brainer. Over and above keeping it all safe you must also make sure that likely equipment would fit. Not only fitting in the building itself but also fits in the entrances available. When looking at a commercial space it may be tempting to just focus on the main building and not fully consider sundries like balconies, awnings, patios, external sheds or buildings but these are all part of the commercial property depreciation and may cause you undue costs if they need to be repaired or torn down if they do not meet building codes.