If you own a commercial property, you could be saving more in your tax returns each year. A Depreciation Schedule allows you to claim Tax Deductions on the decline in value of your building and its fixtures, improving your financial outcome.
Depreciation Schedules = Tax Deductions
What is Depreciation?
Depreciation is essentially a method to account for the property's wear and tear over time. It's an important Tax Deduction because it reflects the decreasing value of your building and the items within it as they age.
This decrease in value isn’t a cash cost like interest or property management fees, but it is a claimable expense that can reduce your taxable income significantly.
Why Depreciation is a Smart Financial Move
Tax Savings
It is an expense you can claim to reduce your taxable income which will lower the amount of tax you pay.
Enhanced Cash Flow
By lowering your tax liability, you free up cash that can be reinvested back into your property or elsewhere.
Long-term Strategy
Regularly updating your depreciation schedule can ensure you’re maximizing potential tax benefits as your property and its contents age.
What Costs Can You Depreciate?
Building Costs
Includes the structural elements of the building like concrete and roofing.
Fixtures and Fittings
Encompasses items such as carpets, blinds, and light fixtures.
How to Benefit from Depreciation
To start claiming these deductions, you'll need a Depreciation Schedule:
Engage a Quantity Surveyor
They specialise in calculating construction costs and the amount of depreciation you can claim each year in a detailed report.
Consult Your Accountant
With the depreciation schedule in hand, your accountant will apply these deductions to your annual tax returns.