My Commercial Investment Property

Updated March 2023

Why should commercial property owners pay more for tax depreciation services, when their properties are often easier to assess?

Some tax depreciation companies see commercial property depreciation as a cash cow, just waiting to be milked. But just because commercial buildings produce bigger rent returns, doesn’t mean you should pay twice as much for a depreciation schedule — especially when it’s no harder to create!

I do not charge more for commercial depreciation schedules. Instead, I custom-quote based on your property size, fitout and location.

How much I think you’re prepared to pay does not factor into my quote—ever.

commercial property depreciation rules

Depreciation on a commercial building consists of both division 40 and division 43 allowances under the ITAA 1997 tax depreciation rules as set out by the ATO.

What can’t be claimed in commercial building depreciation schedule

Like residential property, new or old, commercial buildings can’t claim deductions for items the ATO deem increase in worth over time.
Such as:

• Plants
• Soil and mulch
• Turf

Also like residential rental property, you can’t claim what does not belong to you.
In the case of commercial property;
If you’re the tenant, you can’t claim deductions on landlord owned items.
And if you’re the landlord, you can’t claim Deductions on tenant owned items.

Can you claim deductions on a vacant commercial building?

Yes you certainly can claim deductions on a vacant building. All you need to do to be ATO compliant is to ensrue the building is advertised as available for rent. This may be a listing with a local real estate agent, an online platform like realcommercial.com.au or even Gumtree.

Are you the landlord or the tenant? Because both can claim the depreciation on the same property

Here’s how:

The ATO says that the person who gets to claim the depreciation is the “legal owner,” but the “economic owner” can claim too, if applicable.

Economic Owner usually refers to tenants that have attached/fixed assets within a property owned by another entity.

For example:
A vehicle washdown bay installed by the tenant can be claimed by the tenant. When the tenant moves out the landlord can start claiming it (unless they make the tenant remove it prior to vacating).

At the same time and on the same property, the landlord can claim deductions for any attached/fixed assets belonging to them as well as special building write-off items

In other words, while commercial property owners can claim depreciation on any assets they own in and on the property, the tenants can claim depreciation on any assets they installed during the lease period.

Depreciation on Commercial Property Fitout only

Typically, but not limited to, the fast food industry; this type of depreciation report is for business owners who buy a franchise and operate out of the parent company’s premises.

The report only includes plant and equipment items (division 40)

I’ve personally worked on countless franchises like Red Rooster, Brodies, Subway and Dominos. These commercial rental properties generally contain Division 40 items only, and are claimed by the tenant.

Some Examples

• Carpet
• Aircon
• Furniture
• Cooking appliances
• EFTPOS
• Security systems
• Typically industrial buildings or commercial offices. We prepare the tax depreciation report for the Division 43 items, claimed by the Landlord. E.g.:
  • The building
  • Hardstand
  • Landscaping
  • Renovations
  • Body corp works, etc

• Depreciation on office building (building + fitout)

  Typically industrial buildings or commercial offices. We prepare the tax depreciation report for the Division 40 and the Division 43 items. E.g.:

  • The building
  • Hardstand
  • Landscaping
  • Renovations
  • Carpet
  • Aircon
  • Furniture
  • Cooking appliances
  • EFTPOS
  • Security systems
  • Shared/common items*

Tax depreciation calculator

You may have found tax depreciation calculators on other websites. These look good, and are helpful for residential reports, but they are pretty much useless when it comes to commercial ones. This is because commercial properties themselves can be vastly different. For instance, what would the point be in seeing the estimated deductions for a 4000sqm potato chip factory when you have a hole-in-the-wall cafe?

Because commercial properties vary so greatly, the only way to accurately know how much depreciation you’ll get is to ask for a customised quote. Send me an email or use the contact form here, and I’ll do a direct comparison with similar properties recently completed. I’ve worked on commercial properties great and small, and everything in between.

5 easy steps to getting it sorted

1. Get a no-obligation free assessment of your property to see if it’s worth it
2. I’ll send you a quote + sample report + a guaranteed minimum per annum deduction amount
3. You supply some basic information about the property
4. One of our Quantity Surveyors will inspect your property
5. We prepare the report and send a copy to you and your accountant

BTW: if you’d like more information about how we compare to our competition, go to our competitors page and see why you should be careful with the provider you choose.

Get Your Quote Here

click here for Loads More Info on Tax Depreciation

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Office Location: 549 Grieve Rd. Rochedale, BRISBANE Queensland 4123