» commercial property depreciation

Transforming spaces: The rise of life science real estate

BMT team — Wed, 17 Apr 2024 05:23:42 +0000

Global interest in the life sciences showed significant increase in recent years. With Australia boasting one of the largest life science sectors in the Southern hemisphere, our local industry witnessed a remarkable 40% growth since 2021, emerging as a highly sought-after destination for investment in life science real estate, which includes private hospitals, medical precincts, innovation districts, laboratories and residential aged care facilities. This $250 billon dollar local industry is home to 2,600 organisations and the continual growth is underpinned by a world-class medical research sector nurtured in internationally respected universities, hospitals, and medical research institutes. The industry is further boosted by significant government support, which includes a research and development tax offset of up to 43.5% and more than A$21.5 billion in support funds for the life sciences, which would include funding for facilities. With an aging population and rising cases of chronic diseases such as heart disease and diabetes, the urgency for advancements in life sciences and healthcare solutions has never been greater, positioning Australia as an enticing hub for investment, development, and the conversion of existing properties into life science real estate. These facilities can include laboratories and research facilities that are furnished with advanced scientific equipment and infrastructure to support research in areas such a genomics, medical discovery and biomedical engineering. Manufacturing and production facilities designed to meet stringent regulatory requirements for the production of pharmaceuticals, biologics, medical devices and other healthcare products are also sought after life science real estate. Creating collaborative spaces like innovation hubs or biotechnology parks that bring together scientists, entrepreneurs, investors and academic institutions to foster innovation, collaboration and knowledge are also excellent examples of rejuvenating existing property into life science real estate. Life science real estate conversion projects can take various forms, depending on the type of property and the specific needs of the life science tenants. Some common examples include: Office buildings: Vacant or underutilised office space can be converted into modern laboratories equipped with specialised equipment, biosafety features, and collaborative workspaces. This transformation often involves significant upgrades to infrastructure, HVAC systems, and safety protocols to meet industry standards. Industrial warehouse spaces: Large industrial buildings or warehouses can be repurposed into biomanufacturing facilities or research labs for biotech and pharmaceutical companies. These projects may require extensive renovations to accommodate regulatory compliant cleanrooms with controlled air quality and regulated humidity for cell culture, fermentation, purification and other bioprocessing operations. Retail and commercial spaces: Former retail or commercial properties may be transformed into incubator spaces, shared labs, or start-up hubs for emerging life science companies. These conversions focus on creating collaborative environments with access to mentorship and shared amenities. Historic buildings: Adaptive reuse of historic buildings or heritage sites can preserve architectural heritage while providing modern laboratories or other life science facilities. Converting existing property into life science real estate requires strict adherence to regulatory standards like building codes, biosafety guidelines, and environmental regulations. Older buildings may need significant upgrades to infrastructure, utilities, and HVAC systems to meet the specialised needs of life science tenants and investing in cutting-edge equipment is vital for operational efficiency and industry compliance. Despite these challenges the life science real estate conversion trend is expected to continue and expand as the demand for innovative research and development spaces grows. Key stakeholders, including real estate developers, investors, life science organisations, and local governments, play a vital role in shaping the future of these conversion projects. These projects not only contribute to the growth and sustainability of the life sciences industry, but also drive economic development, job creation, and technological innovation while exemplifying the spirit of adaptive reuse that will solve the increasing demand for state of the art research and development facilities. Collaboration with experienced professionals including architects, engineers, quantity surveyors and other consultants is crucial for navigating the complexities of life science real estate conversion. Adaptive reuse conversion to life science real estate will hold significant depreciation value. Below is a case study of a substantially renovated warehouse of close to 460sqm that was converted into a life science centre with various office spaces, breakout rooms, a staff kitchen, laboratories and various utility rooms. Table 1. An example a life science real estate conversion from warehouse to research space. *The Depreciation deductions in this table were calculated using the diminishing value method. With significant depreciation benefits available on the conversion of an existing property for adaptive reuse, we recommend contacting a specialist quantity surveyor like BMT Tax Depreciation for further advice or to request a quote on your life science real estate conversion.

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Repurposing for demand: Office to residential conversions

BMT team — Fri, 23 Feb 2024 04:51:40 +0000

The evolving work landscape has led to businesses reassessing their office footprint, resulting in a decrease in office leasing. While the demand for A-grade or prime office space remains solid in some areas, older or subprime office buildings are struggling to fill their floors, with research showing a 6% decrease in demand from a year ago and a 24% decrease from pre-pandemic levels in cities globally. Some owners may consider adaptive reuse as a viable option to preserve the building, with popular options including hotel conversions, data centres and the office to residential conversion. Repurposing office buildings into residential units is gaining traction worldwide as a solution to housing shortages. In New York, the Office Adaptive Reuse Task Force is focused on converting outdated office spaces into housing, aiming to create 40,000 apartments from unused office buildings. New data indicates that 250 million square feet of vacant office space in Europe’s top 35 cities can potentially yield 500,000 homes and Australia is in a similar position. NSW office vacancy rates are currently above 13% and a recent study by the Property Council of Australia found that almost 90 Melbourne CBD office buildings are ‘ripe for adaptive reuse’, which could create up to 12,000 new homes in locations where amenity, transport connections and jobs already exist. In Melbourne the superannuation fund Australian Unity recently converted its headquarters into a seniors residential complex and the TNT Apartments towers at Redfern in Sydney were converted from a commercial space to 181 residential apartments. Though the high costs and regulatory challenges have been a deterrent for investors so far, governments worldwide are incentivising such conversions, and policymakers are working to simplify regulatory obstacles, which will hopefully reach Australian shores soon. In addition, the depreciation deductions available on these office to residential conversions will also increase the investor’s cash flow. Below is an estimate of the depreciation deductions that an investor might earn when converting a 1,200 square metre office space in North Sydney to 12 x 100 square metre residential units. Each includes two bedrooms, one bathroom, a kitchen with modern appliances and a connecting lounge area. To maximise the depreciation deductions on your office to residential conversion or to find out more about BMT and the additional services we offer, contact the team on 1300 728 726 or Request a Quote.

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Claiming depreciation on medical equipment

BMT team — Mon, 16 May 2022 02:01:28 +0000

The healthcare industry has been under immense pressure in recent years. An increase in chronic disease, an ageing population, and the recent emergence of COVID-19 have all resulted in growth in demand for medical services. BMT Tax Depreciation has prepared numerous depreciation schedules for medical centres across Australia. Medical centre operators can benefit from highly advantageous tax deductions that are available to be claimed as depreciation on medical equipment. With the Health Services industry in Australia to have an estimated market size of over $170 billion dollars, it’s crucial that all available depreciation deductions are claimed. What is property depreciation? Claiming depreciation on medical equipment Case study: Depreciation on medical centre What is property depreciation? Depreciation is the natural wear and tear of a building and the assets within it over time. The Australian Taxation Office (ATO) allows owners of income producing properties to claim this depreciation as a tax deduction. There are two types of deductions available to claim. Capital works deductions (Division 43) is the building’s structure and the assets that are permanently fixed to the property. And plant and equipment deductions (Division 40) are assets that are easily removable from the property or are mechanical in nature. Claiming depreciation on medical equipment The definition of a healthcare centre is broad. It can include general practitioners (GPs), dental surgeries, imagery and radiology centres, hospitals and so much more. For the purpose of this article, we will focus on general practitioners. Medical equipment is one of the more costly expenses in opening and operating a GP centre. Some medical equipment commonly found in GP centres include examination beds, defibrillators, ECG machines, medical refrigerators, reception furniture, photocopiers, privacy curtains and telephone systems. These assets all hold lucrative deductions that can be claimed each financial year. Case study: Depreciation on medical centre ‘ABC Medical Centre’ is a private general practice medical centre operating in Melbourne. It has six consulting rooms and provides a variety of medical services. The centre was purchased in 2018 for $2,800,000 and is owner operated. Because this business owns the building as well as occupies it, it is entitled to claim the capital works deductions as well as plant and equipment depreciation. The following table demonstrates the five-year cumulative depreciation deductions claimed by ABC Medical Centre for capital works (Division 43) and plant and equipment (Division 40). This table indicates the top depreciable assets claimed by Business ‘ABC’ over five years. As we can see there are significant deductions available on these assets for ABC Medical Centre, helping to recoup the cost of expensive medical equipment and boost cash flow. Depreciation found on medical equipment alone is a substantial deduction and shouldn’t be missed. Missing these deductions can result in losing thousands of dollars. BMT Tax Depreciation has optimised its commercial process to ensure clients claim the most deductions possible. BMT utilises legislation to maximise depreciation deductions and to ensure compliance and applies various business incentives currently available including temporary full expensing, backing business investment and others. To learn more about depreciation on medical equipment or how to claim, Request a Quote online or contact BMT Tax Depreciation on 1300 728 726. Disclaimer: The information provided in this article is based on medical centre size, date of acquisition, size of business entity etc. This information is not to be used as a quote or guaranteed tax depreciation amount. Contact BMT for a specialised tax depreciation schedule.

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Three facts about investing in commercial warehouses

BMT team — Wed, 12 Jan 2022 05:55:42 +0000

The demand for modern warehouses has grown significantly in recent years. Since warehouses are centres for many forms of logistics activity, warehouse investment is on the rise. It doesn’t look like this growth will slow down any time soon, with CBRE predicting e-commerce will drive requirements for an additional 350,000 SQM of new space each year. Here are three facts to know about investing in commercial warehouses. Fact 1: There are a variety of warehouse investment types Different types of commercial warehouses fit different purposes. Broadly, a warehouse will fall into one of four categories. Production warehouse: This type of warehouse is used to manufacture and produce goods. Typically located within a manufacturing or production site, a production warehouse will hold stocks of raw materials to ensure there is always enough supply to make the manufacturer’s product. Storage warehouse: This warehouse type is often used for long-term storage of inventory or finished goods. Storage warehouses may also be used to store the components needed to create the finished product, so that they are available quickly when required. Fulfilment warehouse: Also known as a distribution centre, this type of facility serves as the link between suppliers and customers. A fulfilment warehouse moves goods along quickly, acting as a centre for order fulfilment, packaging, labelling and transportation. Technology is often used to improve cost and efficiency, and hence customer service. Sorting and consolidation warehouse: Rather than being used for storage, this type of warehouse receives inbound shipments from several suppliers and sorts the items according to their end destination. This type of warehouse might combine smaller shipments into larger, more economical loads intended for the same area. Fact 2: Warehouses may use manual labour or automation Some of the more traditional warehouses use manual handling systems, operating in a non-automated way. In these facilities, operators manually move the goods with equipment such as forklift trucks, conveyors and pallet trucks. Semi-automated warehouses are more high-tech than traditional warehouses, but manual handling still plays an important role. A company might opt for a semi-automated solution if there are safety issues or a high number of manual handling errors impacting profitability. A pallet shuttle system is an example of a semi-automated solution, where an operator places the pallet in the first position of a storage channel using a forklift, then a motor-driven shuttle loads and unloads the pallets. Fully automated warehouses use state-of-the-art mechanised technology to maximise warehouse efficiency. This kind of warehouse uses robotics to assist humans with retrieval, moving, sorting and picking. This machinery helps to save on labour costs and improves both efficiency and operational safety. Due to the additional equipment required for automation there will be more plant & equipment depreciating faster than the building, and therefore higher deductions may be available. Fact 3: Warehouse investment yields lots of tax deductions BMT wants to remind both industrial space investors and the businesses that operate from them to ensure they are claiming every tax deduction they are entitled to. Depreciation is the natural wear and tear of the commercial warehouse and its fit-out, which can be claimed to reduce taxable income. The sheer size of the structure of a warehouse generally means that there are ample capital works deductions available. Depending on the warehouse type, the capital works deduction fixed rate can change. For example, currently manufacturing industries (including warehouses used for manufacturing) capital works deductions are calculated at a fixed rate of 4 per cent. Storage and distribution warehouses capital works deductions are depreciated at a rate of 2.5 per cent. The other side of commercial warehouse depreciation is the fit-out. This is usually owned and claimed by the party that is using the warehouse as their business operations. These assets depreciate at a rate based on their effective life as set by the Australian Taxation Office. A business that owns a new warehouse with a fit-out including shelving, machinery like forklifts, picking/packing equipment and office furniture could reasonably expect to claim a first full year depreciation deduction of $140,000 and $2,700,000 in total (this does not consider business incentives such as temporary full expensing and backing business incentive). Tax depreciation schedules are the key to claiming the maximum depreciation deductions when investing in commercial warehouses. A BMT Tax Depreciation Schedule applies all industry specific legislation to ensure commercial depreciation deductions are claimed to their full potential and compliantly. BMT Tax Depreciation has optimised its commercial process to ensure both owners and tenants claim the most deductions possible. To learn more about commercial warehouse depreciation, call BMT today on 1300 268 628.

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The ‘Amazon effect’ is changing the warehouse market

BMT team — Thu, 20 May 2021 00:21:39 +0000

There’s been a distinct rise in demand for industrial property in recent years, particularly for warehouse storage space. This is due to the so-called ‘Amazon effect’ which has resulted in an increase in online retailers requiring the space to store, pack and send orders. As industrial warehouse demand grows, it’s important for owners or tenants to be aware of the depreciation deductions on offer. You could be missing out on thousands of dollars in tax deductions by not taking advantage of your warehouse depreciation entitlements. Here’s our complete guide to warehouse depreciation. What is depreciation? Warehouse depreciation deductions How to claim warehouse depreciation What is depreciation? Depreciation is the natural wear and tear that occurs to a building and the assets within it over time. The Australian Taxation Office (ATO) allows owners of any income producing properties (including warehouses) and businesses to claim a tax deduction for this wear and tear. Warehouse depreciation deductions Warehouse depreciation deductions can be claimed for the wear and tear of the building structure via a capital works deduction, and for the plant and equipment assets contained within the property. Capital works Also known as building write-off, these deductions are available for the depreciation of the building’s structure and are based on the historical construction costs of the building and any items fixed permanently to the building. Examples include the bricks, windows, doors and walls. When assessing capital works deductions commercial warehouses can fall into two ATO classifications. The first is as a “building intended to be used on completion for non-residential purposes such as a shop or office”. Investors in this category can claim eligible capital works deductions if construction commenced after 19 July 1982 at a rate of 2.5 per cent or 4 per cent, depending on the actual date of construction. The second classification is a “building intended to be used wholly or mainly for industrial activities”. This category is for industrial warehouses used for manufacturing. In this case, investors can claim capital works deduction on the warehouse a rate of 4 per cent per year if it was built after 26 February 1992. But if the building was constructed after 15 September 1987 and before 26 February 1992, this rate changes to 2.5 per cent. Going back even further, a manufacturing warehouse constructed between 21 August 1984 and before 15 September 1987,the rate changes again to 4 per cent. You can visit BMT’s capital works deductions webpage for a reference table showing these dates. Plant and equipment assets Plant and equipment assets refer to items which are mechanical or easily removable and these assets can be claimed by property owners: Warehouse tenants can claim depreciation on any fit-out they add from the starting date of their lease. If a tenant removes items at the end of their tenancy, they may also be able to claim any remaining depreciation for assets that are removed and scrapped when they vacate the warehouse. This can become complicated to work out who is entitled to claim what, as warehouse owners are also entitled to claim depreciation on assets installed once a tenancy has ceased. For this reason, it’s important to contact a quantity surveyor to ensure that each party makes their claim correctly. How to claim warehouse depreciation Property depreciation can make a significant difference to a property owner’s cash flow each financial year so it’s important to organise a tax depreciation schedule. A BMT Tax Depreciation Schedule lasts forty years, considers industry specific legislation, provides a range of depreciation methods and includes a property inspection. Ensure you are maximising the cash return from your investment property or business this financial year and Request a Quote today. People also enjoy reading: What’s happening in the commercial property market Is co-working the future of the workplace? Could solar farms be the nation’s preferred future energy source?

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Commercial property depreciation offers reliable cash flow

BMT team — Tue, 21 Jul 2020 00:00:46 +0000

Commercial facilities come in all shapes and sizes such as multi-story office towers, solar farms, gyms and restaurants. Many factors can affect the profitability of a commercial building and the business operating from it. One of the most constant and reliable sources of cash flow is the depreciation deductions that both owners and tenants can claim. In this article we will look at: What is depreciation of a commercial facility? How can both commercial owners and tenants claim depreciation? How is commercial property depreciation claimed? Determining plant and equipment depreciation based on the commercial industry Benefits of investing in a commercial property Renovating a commercial property What happens when selling a commercial property? Claim the most commercial property depreciation with a specialist What is depreciation of a commercial facility? Property depreciation is the wear and tear of a building’s structure and assets over its lifetime. Depreciation is a natural process and commercial owners and tenants can claim this depreciation as a tax deduction. For commercial owners, depreciation can boost cash flow by thousands each year. Depending on the type of building, lifetime depreciation deductions can fall into the hundreds of thousands, sometimes millions, of dollars. How can both commercial owners and tenants claim depreciation? Commercial owners can claim depreciation for the natural wear and tear that occurs to a building’s structure and its fixtures and fittings over time. Some common deductions that BMT find commercial owners includes the buildings walls, doors, roof, bathroom fixtures, sheds, roads and driveways. Depreciation deductions for commercial tenants work differently. They only claim depreciation for the assets they own within a property. BMT find many different deductions for commercial tenants based on their industry. Common deductions include desks, shelving and power tools. Sometimes an owner also occupies the commercial building. For example, a mechanic may own the workshop that he operates his business from. In these instances, the mechanic can claim all deductions available on both the building’s structure and assets held by the business. How is commercial property depreciation claimed? The building structure and any fixed assets are claimed under capital works deductions. Where constructed commenced after 20 July 1982, capital works can be claimed at a rate of 2.5 per cent per year. These deductions are available for the lifetime of the property, which can change based on the industry. Some industries that face increased wear and tear can claim a higher rate of 4 per cent. Easily removable fixtures and fittings, or those that are mechanical in nature, can be claimed as a plant and equipment deduction. Plant and equipment assets are common in a tenant’s fit out and depreciate at a rate based on their effective life which is set by the Australian Taxation Office in TR2020/3. There are also a number of depreciation incentives available for plant and equipment assets including temporary full expensing and and low-value pooling. Determining plant and equipment depreciation based on the commercial industry As mentioned, plant and equipment deductions can be depreciated throughout their effective life at a rate based on the commercial industry. Let’s look at how this works. In practice: Depreciation rates in different industries Jen is a business owner and commercial investor with a portfolio consisting of a number of different types of commercial buildings. A café and retail gift store are two properties within her portfolio. In 2018, Jen decided to install new carpets in her café and retail store. Following this, she organised an adjustment to be made to her tax depreciation schedule for each property. Doing so ensured that she could claim depreciation on the new carpets.She found that while both carpets are very similar and valued the same, each depreciate at different rates. Using the diminishing value method, the café carpet has an effective life of five years and therefore depreciates at a rate of 40 per cent, while the carpet in the retail store has an effective life of eight years and therefore depreciates at a rate of 25 per cent. Benefits of investing in a commercial property For property investors, there are two key benefits of investing in commercial property. 1. Long leases available Commercial properties are generally leased by tenants on longer leases than residential properties. Some leases can span across five to ten years, or even decades. Longer leases can ensure that the investor has a strong and reliable cash flow trajectory that helps their future planning. 2. Diversified and flexible portfolio The current economic climate has made the importance of having a diverse investment property portfolio more apparent than ever before. Commercial investment properties offers the owner many more possibilities than residential properties can. Not only can owners spread their properties across location, the commercial industry also allows them to hold different property types across many industries. They also have the potential to be repurposed to meet current consumer trends and preferences. Renovating a commercial property A commercial property renovation provides many benefits for the owner, including increased depreciation deductions. Any assets removed during a renovation are ‘scrapped’. Scrapping allows them to claim any residual value of removed assets in the same financial year. This is in addition to the first year deductions of the newly installed assets. The same applies for removed tenant fit-out. If the tenant is required to remove their fit-out at the end of their lease, they can scrap these assets and claim further deductions for that financial year. Completing a structural renovation lets owners claim capital works deductions on their older properties. Even if the property was originally constructed before 20 July 1982, they can still claim deductions on any new capital works renovations they have completed, plus any renovations completed by previous owners. What happens when selling a commercial property? When an owner of a commercial building sells the property and makes a capital gain, they may have capital gains tax (CGT) liabilities. CGT is a type of tax you pay on the capital gain made from the sale of an income-producing […]

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Boutique hoteliers can boost their cash return with depreciation

BMT team — Tue, 04 Feb 2020 21:43:26 +0000

Boutique hotels are fast becoming the top choice for trendy travellers in 2020. With quirky charm and niche décor, they generally offer between 1 to 100 rooms. From charming rural settings to seaside bungalows, boutique hotel accommodation can be found all across the country and in various forms. For hoteliers, keeping up with the latest design trends and accommodating for modern travellers can be costly so it’s important to be aware of any taxation benefits on offer. You may be eligible to claim hundreds of thousands of dollars in property depreciation deductions. In this article we will consider: Depreciation and accommodation Boutique hotel depreciation case study Depreciation and accommodation Property depreciation refers to the wear and tear of a building and the assets contained within it. The Australian Taxation Office (ATO) allows owners of income-producing buildings to claim depreciation for two categories: capital works depreciation and plant and equipment assets. Capital works refers to the deductions available for the building’s structure and items deemed to be permanently fixed to it such as bricks, mortar and staircases. The owner of traveller accommodation, which refers to a hotel, motel or guest house with ten or more rooms, can claim capital works deductions at a rate of either 2.5 per cent or 4 per cent. Owners who purchase short term traveller accommodation constructed between 21 August 1979 and 21 August 1984 are eligible to claim capital works deductions at a rate of 2.5 per cent for forty years. This is also the case for properties constructed between 16 September 1987 and 26 February 1992. Owners of traveller accommodation constructed from 22 August 1984 to 15 September 1987 allow owners to claim at a rate of 4 per cent over twenty-five years. For properties constructed after 26 February 1992, the rate is also 4 per cent. Plant and equipment assets are items that can be easily removed from the property such as flooring and furniture. Depreciation deductions for these assets are calculated based on each item’s individual effective life as set by the ATO. Plant and equipment assets are items that can be easily removed from the property such as flooring and furniture. Depreciation deductions for these assets are calculated based on each item’s individual effective life as set by the ATO. Boutique hotel depreciation case study See how a hotelier claimed $18,738 in the first financial year alone for just one section of their property. In this scenario, the owner is claiming depreciation for a fifty-room boutique hotel featuring a rooftop beer garden. The table below shows just a few of the depreciation deductions available for the plant and equipment assets found on the rooftop: The boutique hotelier can claim a first-year deduction of $18,738 for the rooftop beer garden with an additional $78,138 worth of un-deducted value remaining. Given there would be several more depreciable assets within the hotel, along with capital works deductions, the claim is likely to be significantly higher. The easiest way to ensure you claim maximum depreciation deductions for your boutique hotel is to contact a specialist Quantity Surveyor to prepare for a tax depreciation schedule. A BMT Tax Depreciation Schedule outlines all eligible deductions available over the lifetime of your property and is 100 per cent tax deductable. To learn more about BMT Tax Depreciation or to order a schedule, contact 1300 728 726 or Request a Quote today. You might also enjoy: 6 hotels offering a unique travel experience Pub, hotel and tavern owners can tap into depreciation deductions too Hotel freehold vs leasehold – what does this mean for depreciation?

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What can I claim as a commercial tenant?

BMT team — Mon, 18 Feb 2019 05:33:31 +0000

Commercial property attracts substantial tax deductions. We recently looked at the depreciation deductions available to commercial property owners, but what can you claim as a tenant in a commercial property? In a commercial property, tax deductions are available for the wear and tear that occurs to a building’s structure and contained assets. The claim is broken down into two categories, capital works and plant and equipment. Capital works refers to the deduction for the building’s structure and any permanently fixed assets and includes things such as roofs, bricks, mortar, windows and wiring. Plant and equipment refers to any assets deemed by the Australian Taxation Office (ATO) as easily removable from the property or those that are mechanical in nature. This includes items such as carpets, air conditioning, ovens or lights. In this article we will look at: Who can claim what? Why claim depreciation? Who can claim what? While owners can claim depreciation for the building’s structure and any assets they own within the property, tenants are entitled to claim deductions for assets they purchase and install during a fit-out. Some common assets tenants can claim include flooring, desks, blinds or shelving. There is also a broad range of industry-specific assets. To search the full list of assets, visit BMT Rate Finder. If lease conditions state a tenant’s property must be returned to its original condition when their lease expires, tenants may have to remove and dispose of assets which have remaining depreciable value. In these circumstances, tenants can write-off these assets as an immediate tax deduction in the year the assets are removed. It is important to contact a specialist Quantity Surveyor to ensure every possible dollar is captured and no depreciable value goes unclaimed. Why claim depreciation? For business owners leasing their premises, claiming tax depreciation can make a significant difference to cash flow, meaning more flexibility when it comes to purchasing stock or undertaking any much-needed renovations. Commercial tenants should contact professional Quantity Surveyors to obtain an ATO compliant tax depreciation schedule to maximise their claim. BMT Tax Depreciation are the commercial property specialists, with expertise across various industries including primary production, mining, manufacturing, office towers, shopping centres and more. For more information on commercial property depreciation, read our Commercial Capability Statement or contact the expert team at BMT Tax Depreciation on 1300 728 726.

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Help your clients to get the most out of their commercial investment properties

BMT team — Wed, 11 Jul 2018 01:46:17 +0000

Many commercial property investors are unaware that they can claim lucrative tax depreciation deductions on their properties and therefore miss out on thousands of dollars each year in unclaimed deductions. To avoid this, it is important that investors get a commercial tax depreciation schedule from a qualified Quantity Surveyor. However, not all Quantity Surveyors are made equal and when it comes to an ATO-compliant depreciation schedule that maximises claimable deductions, it is crucial that investors engage a specialist organisation. What is BMT Tax Depreciation’s point of difference? With more than twenty years of experience, BMT Tax Depreciation set themselves apart from their competitors by conducting their own comprehensive property inspections, rather than outsourcing inspections or using generic information to inform a schedule. Depreciation schedules are BMT’s specialty and all resources are focused on creating an all-inclusive schedule to secure investors every possible deduction. Using their detailed knowledge of all relevant taxation legislation, specialist Site Inspectors visit the property and take measurements and detailed photographs of fixtures, fittings and appliances to document assets that attract depreciation deductions. They use a laser distance measurer device and record data on a specially designed application developed by BMT to ensure compliance. Site Inspectors will also uncover any renovations that have been completed to the property, even those completed by a previous owner, which can be claimed by the current owner. BMT Tax Depreciation are able to secure more deductions for investors than their competitors because of their experienced in house Site Inspectors and thorough inspection and data collection processes. What commercial sectors do BMT Tax Depreciation service? BMT can prepare a depreciation schedule for any commercial investment property and have experience working across many commercial sectors. Farms, beauty clinics, ice creameries, cinemas and hotels are just some examples of commercial properties BMT can service with a depreciation schedule. Servicing a large range of residential and commercial property owners across Australia has meant working with some diverse, and sometimes unusual, buildings in the process. Some of the unique schedules we have completed include the iconic Melbourne Star “Observation Wheel”, the Sydney Polo Club and the world’s largest rocking horse in South Australia. There are sizeable deductions available to the owners of any commercial investment property and it is essential to contact a specialist Quantity Surveyor such as BMT Tax Depreciation to arrange a tax depreciation schedule to ensure the available deductions can be claimed. What is included in a commercial tax depreciation schedule? A commercial tax depreciation schedule prepared by BMT Tax Depreciation is a comprehensive document covering all aspects of a property’s depreciation. It includes a summary of capital expenditure and a capital allowance and tax depreciation summary outlining the 40 year deduction forecast for the property. The document also includes a breakdown of the diminishing value and prime cost methods as well as individual schedules comparing the two methods. You will also find pooling schedules and grouped depreciation rates in the document. Tax depreciation schedules include simple tables and graphs to help investors understand the presented information. There is also a glossary of terms included at the back of the document for reference. To learn more about claiming depreciation for any commercial property, visit our commercial tax depreciation page.

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Tax time tips for commercial property owners

BMT team — Fri, 01 Jun 2018 04:54:09 +0000

With tax time quickly approaching, many property investors will be preparing to visit their Accountant to complete their annual income tax assessment. Getting your tax in order can be a confusing task at the best of times, but when you’ve got a commercial investment property, it can get even more complex. Here are five tax time tips for commercial property owners, to help ensure you’re claiming everything you’re entitled to. 1. Claim for new and old properties Both new and older commercial properties will attract some depreciation deductions. It is a myth that older properties do not attract a claim. Although the Australian Taxation Office (ATO) places restrictions on claiming capital works deductions (depreciation for the structural elements of a property, such as roofs, walls and floors) there are no date restrictions for depreciating plant and equipment assets. The ATO advises that the owner of any commercial property in which construction commenced after the 20th of July 1982 can claim capital works deductions. On the other hand, depreciation deductions for plant and equipment assets are calculated based on the individual effective life for each item set by the ATO. Deductions for plant and equipment are also dependent on each asset’s condition and quality. As these items are rarely the same age as the property, generally having been updated over time, there are often significant deductions available to the owner for plant and equipment depreciation claims. So in a nutshell, if the building itself is too old for a depreciation claim, the owner can generally still claim for the plant and equipment assets contained within. 2. Claim renovations completed by previous owners Any renovations completed to an investment property can also be claimed, even if they were completed by a previous owner. This includes items which may not be obvious such as new plumbing, water-proofing or updated electrical wiring. For capital improvements of a structural nature to qualify as a capital works deduction, the renovation must have commenced within the qualifying dates set by the ATO. Recently installed plant and equipment items are also likely to receive higher depreciation deductions. This is due to the increased costs involved in purchasing and installing these assets and the condition the assets are likely to be in when a specialist Quantity Surveyor makes their assessment. 3. Both tenants and owners are entitled to claim depreciation for any fit-out Commercial tenants can claim depreciation for any fit-out they add to a property once their lease commences. This includes items such as desks, blinds, shelving, carpets, vinyl, fire fighting equipment and security systems. If lease conditions mandate a tenant return the property to its original condition, they may also be able to claim a write-off for any remaining depreciable value available on scrapped assets. This 100 per cent deduction must be done in the same year as the item is removed from the property. Any assets a tenant leaves behind after the tenancy has ended can also be claimed by the commercial property owner. Deductions for fit-outs can become very complicated, so it is important to consult with an expert. 4. Don’t wait if you have only just purchased a property Property investors will often wait until the next financial year to claim depreciation deductions if they have only just purchased a property. However by doing so, they are missing out on valuable cash flow that can be particularly beneficial so soon after outlaying substantial funds to secure the property. Specialist Quantity Surveyors use legislative tools, for example immediate write-off and low-value pooling, to make partial year claims more beneficial to property owners. It is worth consulting an expert to find out what claims are available. Investors can also claim the tax depreciation schedule fee straight back in the same financial year if they arrange the schedule before the 30th of June. 5. Previous year’s tax returns can be adjusted If a commercial property investor has not been claiming depreciation, the previous two financial year’s tax returns can be amended. A tax depreciation schedule can provide the details of any deductions missed for the investor to make a claim and recoup these deductions. To order a schedule so you can start claiming depreciation deductions this tax time, apply online now.

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