Tax Depreciation for Commercial Property Investors

1. Can Commercial Property Owners Claim Tax Depreciation?

Short Answer:

Yes! Commercial property owners can claim depreciation on both the building structure (Division 43) and assets (Division 40).

What Can Commercial Investors Claim?

✔ Building Structure (Division 43) – 2.5% per year for eligible capital works.
✔ Plant & Equipment (Division 40) – Includes assets like carpets, lighting, air conditioning, and office furniture.
✔ Fit-Out Deductions – Any improvements made to the property may qualify.

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2. How Does Depreciation Work for Tenants Leasing a Commercial Space?

Short Answer:

Tenants who pay for a fit-out can claim depreciation on those improvements, even if they don’t own the property.

What Can Tenants Claim?

✅ Fit-Out Costs – Office partitions, flooring, lighting, signage.
✅ Plant & Equipment (Division 40) – Includes IT infrastructure, desks, and shelving.
✅ Leasehold Improvements – Renovations or structural changes to the leased space.

📌 Get a Tax Depreciation Report for Your Business: Request a Consultation

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3. What Types of Commercial Properties Qualify for Depreciation?

Short Answer:

Almost all income-generating commercial properties qualify for tax depreciation.

Eligible Commercial Property Types:

✅ Office Buildings – Fit-outs, IT infrastructure, and furniture.
✅ Retail Spaces & Shopping Centres – Display shelving, registers, signage.
✅ Warehouses & Industrial – Racking systems, conveyor belts, security systems.
✅ Medical Centres & Hospitality – Specialised equipment, restaurant fit-outs, hotel furnishings.

📌 Not Sure If Your Property Qualifies? Speak to an Expert

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4. How Does Depreciation Work for Mixed-Use Properties (Commercial & Residential)?

Short Answer:

If a property has both commercial and residential components, depreciation is apportioned between the two based on their use.

How Mixed-Use Property Depreciation Works:

✔ Commercial portions have no restrictions on Division 40 & 43 claims.
✔ Residential portions follow ATO depreciation rules for investment properties.
✔ A tailored tax depreciation schedule ensures maximum deductions.

📌 Get a Mixed-Use Property Depreciation Report: Request a Quote

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5. What Happens to Depreciation When Selling a Commercial Property?

Short Answer:

Depreciation affects Capital Gains Tax (CGT), but tax planning can minimise liabilities.

Key CGT Considerations:

✔ Claiming depreciation reduces the cost base, which may increase CGT.
✔ Capital Works (Division 43) deductions must be factored into CGT calculations.
✔ CGT exemptions or rollover relief may apply in some cases.

📌 Need CGT & Depreciation Advice? Talk to an Expert

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6. Do Commercial Property Owners Need a Site Inspection for a Depreciation Report?

Short Answer:

It depends. Larger or complex commercial properties often require an inspection, while some standard properties can be assessed via a desktop report.

When a Site Inspection is Recommended:

✅ Large-Scale Developments – Offices, retail centres, industrial parks.
✅ Properties with Major Renovations – Ensures all improvements are captured.
✅ Specialist Commercial Buildings – Medical, hospitality, manufacturing sites.

📌 Find Out If You Need a Site Inspection: Get a Free Assessment

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7. How Long Does It Take to Get a Commercial Tax Depreciation Report?

Short Answer:

Most commercial reports are delivered within 7-10 business days, depending on property complexity.

Process Timeline:

1️⃣ Order Online – Provide basic property details.
2️⃣ Data Collection & Cost Analysis – We assess fit-out costs, capital works, and eligible assets.
3️⃣ Report Preparation – Completed by our Chartered Quantity Surveyors (AIQS & RICS).
4️⃣ Report Delivery – Sent to your email in 7-10 business days.

📌 Order Your Commercial Depreciation Report Now: Start Here