A tax depreciation company has provided insight into what assets investors should be looking to capitalise on.
BMT Tax Depreciation says an “Amazon Effect” is creating “tax goldmines” for investors, particularly many industrial property investors who may not be aware of tax deduction opportunities that many of their assets hold.
“The Amazon Effect has led to a boom in the industrial property sector over recent years, and while many investors see this market delivering strong returns moving forward, we believe that some in this group may be unaware of the lucrative tax deductions on offer for many of these assets from the get go,” said Bradley Beer, BMT CEO.
“Owners and tenants of industrial properties are eligible to claim depreciation deductions for the wear and tear that occurs to the building structure (capital works deductions) and for easily removable items (plant and equipment deductions).
“Unlocking these deductions could have a substantial impact on the yield of a property and should be taken into account during the valuing and buying process.”
An assessment of BMT client claims found that the following represent the most lucrative industrial assets from a tax deduction perspective.
1. General refrigeration items
In then 2018-19 financial year, the average BMT client claimed $51,640 in deductions. The depreciation value of refrigeration assets can be claimed over the effective life of 10 years, BMT noted.
2. Loading bay dock levellers
This represented the second most lucrative depreciation asset for industrial sites, with the average claim being $9,942 last financial year. Dock levellers can be claimed over 20 years, BMT said.
Mr Beer said there were also some “easily overlooked items” that hold deductions and “seemed to be found in the vast majority of industrial sites” BMT assessed.
“Light fittings, shades and bathroom accessories might not sound like items that hold tax deductions, but they do and are extremely common,” said Bradley Beer.
“Bathroom accessories can instantly be claimed in the first full financial year and were found in 96 per cent of the properties we assessed.
“Almost 100 per cent of the industrial sites assessed had light fittings and shades, with the average site claiming $2,422 last financial year.”
Furthermore, hot water installations, automatic garage door parts, exhaust fans, door closers and fire control and alarm systems all have depreciable value and were found in more than seven out of ten cases from the industrial properties BMT assessed, Mr Beer explained.
“The reality is the Amazon Effect and growing demand for industrial property assets will lead to new supply which will create lucrative tax depreciation opportunities for savvy property investors and tenants,” he added.
“The size and scale of the deductions on offer should encourage these investors and tenants to work with expert advisers to ensure all deductions are uncovered and properly claimed. This could make a strong performing asset, perform even better.”