Separate building, fit-out and ownership
Commercial depreciation assignments can involve a building owner, a tenant or both. Start by identifying who incurred the expenditure and who owns the relevant assets. A purchase price for an entire property does not establish every construction or asset cost.
What records should owners provide?
Collect acquisition documents, construction costs, renovation records, existing schedules and an asset register. Identify any equipment included in the purchase and any assets leased separately. Tell the preparer about mixed residential and commercial use.
What should tenants prepare?
Supply the lease, fit-out agreement, invoices and details of landlord contributions. Ownership and responsibility for replacing or removing fit-out may affect the assessment. Do not assume the landlord and tenant can both claim the same expenditure.
How to scope the report
Identify the income years, areas and assets to be assessed. Ask whether an inspection is needed and how missing cost records will be handled. A larger building does not, on its own, substantiate an advertised annual deduction. Your accountant determines the relevant tax treatment.
Keep other reporting needs separate
A commercial market valuation assesses value for an instructed date and purpose. A depreciation schedule supplies construction and asset information. Tell Propti if you need both so the scopes can be quoted separately.
Frequently asked questions
Are commercial and residential asset rules identical?
No. Property use, ownership and the applicable provisions matter. Have the preparer and accountant assess the specific assets.
Can a tenant order a schedule?
A tenant with relevant fit-out expenditure can discuss the appropriate scope with their accountant and report preparer.
Sources and further reading
- ATO: Work out your capital works deductions — Eligible construction expenditure and applicable deduction rules.
- ATO: Second-hand depreciating assets — Restrictions relevant to previously used residential rental assets.
Arrange the right report
Explore tax depreciation with Propti. Send the property address, purpose, required date and recipient’s instructions when you request a property report quote.