Why tax depreciation matters for commercial office
Commercial office is one of the most depreciation-friendly asset classes in Australia. The s40-27 second-hand restriction does not apply to commercial property, so every Division 40 plant & equipment asset is fully deductible regardless of when the property was acquired or how many prior owners have held it.
Schedules typically capture 15–25% of cost basis in Division 40 across HVAC, lifts, fit-out, partitions, security systems, sanitary fixtures, fire systems and tenancy fit-outs. The remainder is captured under Division 43 capital works, generally at 2.5% p.a. over 40 years for commercial buildings where construction commenced on or after 20 July 1982 (construction between 22 August 1984 and 15 September 1987 is claimed at 4%).
A commercial office tower presents valuable depreciation deductions for both owners and tenants, maximising the financial benefits associated with the property.
For Owners:
As an owner of an office space, you can claim significant depreciation deductions for various components of the building. This includes the structure itself, such as the walls, roof, flooring, and foundation. Additionally, the fixtures and fittings within the office spaces, such as lighting, air conditioning systems, elevators, and security systems, are also depreciable.
Depreciation deductions are calculated based on the diminishing value or the prime cost method, considering the estimated useful life of each depreciable item. By engaging TDA Tax Depreciation you can ensure accurate and thorough Tax Depreciation Reports are maximised allowing you to claim every possible deduction. This might even include the common areas to the facility.
For Tenants:
As a tenant of an office space, you can also benefit from depreciation deductions for any fit-out improvements made to the leased space. This includes the installation of partitions, carpets, built-in cabinetry, electrical and data wiring, and any other assets that are specific to your business needs.
The depreciation deductions for tenant improvements are typically claimed over the lease term or the effective life of the asset, depending on the nature of the improvement.
Engaging with Tax Depreciation Australia will ensure every element of your fit-out and business is correctly depreciated. A complete and thorough assessment of the property will be carried out with a comprehensive Tax Depreciation Report being prepared. To find the likely deductions you're eligible for, please call 1300 417 317 or click the chat button to engage with a tax depreciation specialist right now.
What we capture in your schedule
- HVAC plant and ductwork
- Lifts and escalators
- Office fit-out and partitioning
- Carpet, vinyl and floor finishes
- Lighting and electrical fit-off
- Fire detection and sprinkler systems
- Security and access control
- Workstation power and data
- Sanitary fittings and tapware
- Common-area furniture
