Businesses are finding themselves in a position where improving the performance of their commercial property is paramount. Improving the performance of a commercial property can lead to an increase in value, better occupancy rates, and a healthier bottom line.
In this article, BMT Tax Depreciation explore how to increase commercial property performance and how claiming depreciation can help businesses recoup costs.
Renovating and completing upgrades is the most effective way to increase commercial property value.
Upgrades may include new flooring, painting, fixtures or perhaps a complete rebuild of the building’s structure. Renovating will increase the value of a property and boost rental demand and rental return.
Businesses should consider completing smart renovations which appeal to a large cohort of tenants and will deliver a high return on the investment. It’s important to discuss any upgrades with a commercial real estate professional to ensure that the works will increase returns.
2. Improve energy efficiency
Improving energy efficiency can save on overhead costs, reduce environmental impacts and attract quality tenants.
Switching to energy-efficient lighting, such as LED bulbs, can help reduce energy consumption and costs. Businesses can also install sensors and timers to ensure that lights are turned off when not in use. Other improvements can include insulation, upgrading appliances, solar panels, improving water storage, airtight window sealing and improving material selection.
Where possible, renovating buildings to use natural lighting and ventilation, utilising green roofs and walls, and using environmentally friendly materials will significantly improve sustainable practices and energy efficiency.
3. Utilise government depreciation incentives
Businesses who own and operate commercial buildings can take advantage of the various incentives introduced by the Australian Government to boost performance.
Under the extended Instant Asset Write-Off, businesses with an aggregated turnover of less than $10 million can claim an immediate deduction for new or second-hand assets added to a building costing less than $20,000 on a per-asset basis.
The newly introduced Small Business Energy Incentive allows businesses with an aggregated turnover of less than $50 million to deduct an additional twenty per cent of the cost of eligible depreciating assets that support electrification and more efficient use of energy. With a total expenditure of $100,000 eligible for this incentive the maximum bonus deduction being $20,000.
Application of the Small Business Energy Incentive
Asses can enhance their cash flow by accelerating deductions and seize the opportunity to carry out asset upgrades that might otherwise be unfeasible.
4. Introduce new amenities
Introducing new amenities to a commercial property can be an effective way to add value to the property. Installing amenities such as new bathrooms, kitchens, fitness centres, cafés, accessible parking and transportation, an outdoor space and security measures will add value and likely attract high end tenants.
5. Claim depreciation
Depreciation is a tax deduction available for the natural wear and tear of an income-producing property and the assets within it. Claiming depreciation allows commercial property owners and tenants to lower potential taxation liabilities while also improving cash flow.
Increasing the value of a commercial property requires a multifaceted approach. Businesses can maximise the depreciation deductions they claim by engaging a quantity surveyor to prepare a tax depreciation schedule.
Quantity Surveyors, such as BMT Tax Depreciation, are one of the few recognised professionals with the training to identify and accurately calculate construction costs.
BMT has streamlined its commercial process to guarantee that both property owners and tenants can claim the highest possible deductions in full compliance with regulations. Additionally, BMT diligently applies relevant government incentives, maximising the benefits available to clients.
If you’re considering upgrading a commercial property or don’t yet have a commercial tax depreciation schedule, call BMT on 1300 728 726 or Request a Quote.