What Can Owner-Occupied Investors with Commercial Properties Claim Tax Depreciation On? 

As an owner-occupier of a commercial property in Australia, you can claim tax depreciation on various aspects of your property. 

The great news is commercial investors are unaffected by the legislative changes made on May 9, 2017. Any second-hand plant and equipment can no longer be claimed on residential properties if it was rented after 7:30 PM on May 9, 2017. However, this legislation does not impact the claiming of commercial properties—making it an exemption. 

This article provides all the necessary information to understand what you can claim on your commercial properties as an owner-occupier and how a quantity surveyor can assist you. 

What Can Investors with Owner-Occupied Commercial Properties Claim? 

As the owner of a commercial property, you can claim depreciation in several key areas: 

Capital Works Deductions 

Capital works deductions cover the building structure and any permanent fixtures, such as walls, floors, roof, kitchen benchtops, and timber flooring.  

Depending on factors like when the property was constructed, these deductions are typically claimed at a statutory rate of 2.5% to 4.0% per year. The percentage depends on what type of commercial property you have and when it was built. 

Plant and Equipment Deductions 

Plant and equipment deductions include any removable assets you install on the property, such as light fittings, flooring (e.g., carpet), blinds, and bathroom accessories. The condition, quality, and effective life of the asset determine the allowances you can claim.  

If you conduct a business out of your commercial property, you can claim depreciation on the plant and equipment assets you own or were left behind by a previous tenant; all plant and equipment are automatically claimable as a commercial premise. 

Strata Equipment 

If your property has common areas, you can claim depreciation on strata equipment like CCTV cameras, elevators, emergency lights, and hand dryers in shared bathrooms. 

The eligibility to claim depreciation for strata equipment in common areas is always only for the property owner. The tenant can’t claim any equipment in common areas since they don’t “own” any share in them. 

Claiming Depreciation on Owner-Occupied Properties: A Case Study 

Here’s a scenario that helps better illustrate what owner-occupied investors can claim depreciation on their properties. 

Anthony bought a retail space in Toowoomba in July 2017 to operate his own business. The space, built in 2003, had timber flooring and a car parking area. Anthony then fitted out the space with blinds, lighting fixtures, and CCTV cameras for surveillance. 

As the owner-occupier of the property, Anthony would be able to claim depreciation on the following: 

• Car parks 

• Flooring 

• Blinds 

• Lighting fixtures 

• CCTV cameras 

The items Anthony can claim aren’t limited to just these items; he can use depreciation for everything he owns in the commercial property, which brings a lot of money back into his pocket. 

Note that for items Anthony did not purchase himself, a quantity surveyor will need to estimate the costs to include in the depreciation schedule. 

Benefits of Having a Tax Depreciation Schedule for Owner-Occupied Properties 

Getting a tax depreciation schedule from a quantity surveyor can help you maximise your deductions. They’re able to calculate the depreciable value of assets in the property. The Australian Taxation Office (ATO) states that owners of income-producing properties can claim depreciation deductions for wear and tear over time. 

Booking a consultation with Duo Tax is the best move you can make as an owner-occupier. We provide advice on the available deductions and prepare a comprehensive tax depreciation schedule tailored to your property. 

Key Takeaways 

• Owner-occupiers of commercial properties in Australia can claim depreciation on capital works, plant and equipment, and strata items. 

• Capital works include the building structure and permanent fixtures like walls, floors, and kitchen benchtops. 

• Plant and equipment cover removable assets such as light fittings, flooring, blinds, and bathroom accessories. 

• Strata equipment in common areas, like CCTV cameras, elevators, and hand dryers, can also be claimed. 

• Engaging a Quantity Surveyor to prepare a tax depreciation schedule can help maximise your deductions and save on taxes.