WITH THE RIGHT ADVICE you can achieve thousands of dollars in depreciation deductions on commercial property fit-outs. No matter what the industry you are in, claiming depreciation will help maximise your cash flow. [Read more…]
Capital Works Deductions Fully Explained
15 July, 2020 by Leave a Comment
UNDERSTANDING tax depreciation lingo can sometimes be confusing but as an investor, it’s important that you have a good understanding of the depreciation deductions you’re entitled to claim – to ensure you’re getting the most out of your investment property.
As outlined by the Australian Taxation Office there are two categories that comprise depreciation deductions – division 43 capital works deductions and division 40 plant and equipment depreciation. [Read more…]
The Stimulus Packages: What Business & Property Owners Need to Know
17 June, 2020 by Leave a Comment
AMID THE COVID-19 pandemic, the government has announced several stimulus packages to help Australian businesses. If you’re a business or property owner, here is what you need to know.
Instant Asset Write-off Expansion
More business owners will be able to claim the instant asset write-off this financial year. The government announced an increase of the instant asset write-off threshold from $30,000 to $150,000.
The increase has also been extended to include business with an aggregated annual turnover of up to $500 million.
The instant asset write-off expansion is now in place and will be until 30 June 2020.
The Backing Business Investment incentive
This fifteen-month incentive will support business investment by accelerating depreciation deductions for remaining assets not affected by the immediate write-off changes.
Different rules apply to whether an entity is using the simplified rules of capital allowances for small businesses.
Small businesses with an aggregated turnover of up to $10 million can take advantage of the Backing Business Investment incentive. They can deduct 57.5% of the asset cost in the year of purchase.
In later years, the asset will be depreciated as part of the general small business pool rules.
Businesses with an annual turnover of up to $500 million will be able to deduct fifty per cent of the asset cost, plus an additional amount of the standard depreciation on the remaining balance, in the year of purchase.
It’s important to note that both the instant asset write-off and backing business investment incentives are only available to business owners. This means landlords who own a commercial building (but do not use the building for business operations) cannot claim the incentives.
Commercial Tenancies Mandatory Code
As you’d be aware, the government has also announced a mandatory code of conduct for commercial tenancies.
This mandatory code introduced a number of good-faith principles to guide negotiations between tenants and landlords, where a tenant has been affected by COVID-19.
Some inclusions involve rental waivers, deferrals and disallowing lease terminations. And you can find out more about the principles here.
Your Complete Depreciation Checklist for Commercial Property
20 May, 2020 by Leave a Comment
AS TAX TIME APPROACHES, you need to understand the depreciation allowances available to owners and tenants of commercial property.
There are many rules which apply and the difference in depreciation found can vary depending on the industry, assets and property.
By becoming more aware of commercial depreciation, property owners (and tenants) can make more informed financial decisions and improve their cash flow and their “bottom line”. [Read more…]
Understanding the Basics of Commercial Property Depreciation?
6 May, 2020 by Leave a Comment
EVERY COMMERCIAL PROPERTY INVESTOR can reduce their tax liabilities by claiming depreciation. When claimed correctly, depreciation deductions can transform a negative cash flow investment into a positive one.
What is commercial property depreciation?
Determine Your Depreciation Before You Purchase
9 April, 2020 by Leave a Comment
BEFORE PURCHASING a commercial investment property, you should first crunch the numbers. That’s because the property will provide an even better return, once depreciation is claimed.
Savvy investors will usually consider the potential return of the property, the surrounding commercial infrastructure, along with the vacancy rates in the immediate area. [Read more…]
Commercial Property Depreciation FAQs
4 March, 2020 by Leave a Comment
GETTING YOUR TAX IN ORDER can be an overwhelming task. But when you have a commercial investment property, it can seem even more complex.
We’ve compiled a list of the most commonly asked questions to highlight just how depreciation can help maximise your cash return on a commercial property. [Read more…]
Renting vs Buying Commercial Property
5 February, 2020 by Leave a Comment
CHOOSING WHETHER to rent or buy commercial property can often be a difficult decision. To help you make the right choice, here are some key considerations. [Read more…]
Discover the Depreciation Available Before You Buy
4 December, 2019 by Leave a Comment
Crunch the Numbers for your Commercial property and Save
BEFORE PURCHASING a commercial investment property, make sure you crunch the numbers. The property may be more affordable if the right depreciation is claimed.
Savvy investors will usually consider the potential return of the property, surrounding commercial infrastructure along with rental vacancy rates in the immediate area.
However, investors will often fail to consider the financial benefit of claiming depreciation deductions prior to making their purchase. [Read more…]
Why Commercial Landlords & Tenants Should Claim Depreciation
23 October, 2019 by Leave a Comment
STARTING A BUSINESS can be a costly venture, but there are ways to reduce the costs involved. And whether you own a commercial property or are leasing the building, you could be entitled to thousands of dollars in depreciation deductions.
How to Greatly Enhance Your Commercial Property Cash Flow
25 September, 2019 by Leave a Comment
CLAIMING PROPERTY DEPRECIATION is paramount for commercial business owners. And yet, research suggests around 80% fail to maximise the deductions available to them.
As a result, they miss out on thousands of dollars.
With a commercial property, both owners and tenants are eligible to claim depreciation deductions simultaneously, so it’s important that both parties contact a specialist quantity surveyor to organise a tax depreciation schedule.
A depreciation schedule will outline all available deductions over the life of the property.
Under Tax Ruling 97/25, quantity surveyors like BMT Tax Depreciation are one of the only professions qualified to estimate construction costs for depreciation purposes.
Case Study: A $820,000 Commercial Office Building
Justin’s company owns a commercial office building purchased for $820,000 and rented for $1,050 per week or $54,600 per annum.
Expenses for the property including interest, rates, property management fees, repairs and maintenance total $57,088.
Without depreciation, Justin’s company is experiencing a loss of $34 per week on the commercial office building.
Justin contacted BMT Tax Depreciation and found his business could claim $40,080 in depreciation deductions for the property in the first financial year alone.
The following table shows Justin’s scenario before and after his company made the depreciation claim for the property.
By claiming depreciation, Justin improved the loss of $34 per week on the company’s property to a return of $198 per week. This improved the tax refund for the property by $12,024 in the first financial year.
Maximise your tax return with property depreciation
As the case study shows, claiming property depreciation deductions can have a significant impact on a commercial business owner’s cash flow position.
Bottom Line: A BMT Tax Depreciation Schedule details all available deductions over the lifetime of a property to ensure investors maximise their cash flow. Schedules have a one-off fee; and are totally tax deductible.
