Empower Your Business

Accounting is Just the Beginning


Building Depreciation is Dead! Long Live Building Depreciation!

Yes, depreciation on buildings, both commercial and residential, is no more and if you’re a property owner you may notice the difference in your 2012 tax bill. But wait, all is not lost for commercial property and that’s for three reasons.

Firstly, there’s a concession available for commercial property owners as at 1 April which allows you, in the right circumstances, to claim depreciation for the fit-out element of your building contained within the original cost for the foreseeable future.

Secondly, many commercial building owners can still claim depreciation for items of building fit-out bought separately from the building at depreciation rates much higher than the 3% available for the entire building.

Lastly, don’t forget that you can still claim the depreciation on your commercial building if you sell this for a price lower than the depreciated net book value as at 1 April 2011. It might therefore, be a good time to bite the bullet and crystallise the reduction in value of your commercial building you’ve suffered over the last two to three years.

And, of course, for lots of building owners depreciation on buildings was just a nasty trap, since the tax saved on the building depreciation all had to be paid back when the building was sold. In short, perhaps deprecation going was not so bad after all?

If you’re a building owner and you’re not sure if you’re claiming all you should, why not get in touch by email or join the A+BAC community on Facebook: this is the place where you can get real-time, practical answers to all your business questions as well as share your own experience with other business captains.