As a commercial property owner, you may not be fully aware of the potential tax benefits available to you. Tax depreciation, often overlooked by property investors, can significantly reduce your tax liability, and improve your overall financial position and cash flow. At Pure Property Management, we recognise the importance of optimising your property investment.
Recently, we have been working with Tax Depreciation Australia who have been assisting some of our clients with tax depreciation reports and thought you may benefit from the knowledge we have gathered and the information they have shared.
Tax depreciation allows you to claim deductions for the natural wear and tear of your property and its assets over time. These deductions can translate into substantial tax savings, yet many property owners don’t know about this opportunity or what they need to do to claim the benefits associated with depreciation.
Without a comprehensive Tax Depreciation Report, you could be missing out on valuable deductions and paying more tax than necessary.
Regardless of the type of commercial property you own, whether it’s an office building, retail space, warehouse, agricultural property, hotel, medical centre, childcare facility, pub, club, or even a residential property, you should be eligible for tax depreciation benefits.
By understanding the depreciation schedule of your assets, you can maximise your tax savings and improve your cash flow. It’s also important to choose which type of depreciation schedule you’ll use to track your depreciation. For example, a diminishing value method (with higher depreciation in early years) or linear depreciation (the same each year).
In addition to standard Tax Depreciation, one aspect of tax depreciation that’s often overlooked is scrapping. When you remove or dispose of a capital improvement from your property, you can claim the remaining value at 100% in the year of disposal. This can be particularly advantageous in scenarios involving property renovations, redevelopment, and tenancy de-fits. However, it’s essential to obtain a scrapping report from a quantity surveyor before undertaking any demolition or reconstruction activities to ensure compliance with tax regulations.
Even if you have commercial tenants vacating your premises, you may still be eligible for scrapping deductions. If tenants leave behind assets or fixtures, you can claim a portion of their remaining value as a deduction.
This underscores the importance of understanding your entitlements and maximising your tax benefits as the property owner.
If you’re interested in exploring the potential tax deductions available for your commercial property, let us know and we can assist with the right people to provide a specialised, personalised and tailored solution for your situation.