Got a warehouse property and want to find ways to maximise deductions?
In this video, we’ll cover how we depreciate a warehouse.
Hi everyone, Tuan Duong, Founder of Duo Tax,
here for another video designed to help you become a better property investor.
Have you thought about buying a commercial property but have been
swayed by the suggestion that it’s a higher risk investment?
Well, when it comes to warehouses, there hasn’t been a better time to look into commercial
property investing. This is because there has been a massive rise in online retailers - especially
now after the pandemic - and more and more retailers are looking for the space to store,
pack and send orders.
Even if you’re not in the online retail space, or if you’re already a warehouse
owner or you’re currently a tenant of a warehouse, you must be aware of the depreciation on offer.
So, in this video, I’m going to take you through what you can claim if you’re a warehouse tenant
or a warehouse owner and how to go about claiming your deductions.
You could be missing out on thousands of dollars in tax deductions by not taking
advantage of your warehouse depreciation entitlements - so make sure to tune in!
But before I start, I want to be clear that this video is for informational purposes only.
In no way should you interpret this as tax advice. We always recommend working with a
qualified accountant or tax agent to give you the best advice for your situation.
A warehouse is considered a commercial property because
it’s built for the purposes of having a business run from it.
The property investors who own warehouses will generate their
income from renting out the space to commercial tenants.
The tenants generate their income from operating their business out of the warehouse.
What’s interesting about investing in warehouses is that there are substantial
tax benefits for commercial property owners and tenants.
Warehouse depreciation can be claimed for the wear and tear of the building structure
with capital works deductions and the plant and equipment assets contained within the property.
Owners can claim depreciation for the building’s structure
and any assets they own within their property.
On the other hand,
tenants can claim depreciation for any assets they purchase and install during a fit-out.
Once their lease starts, tenants can also claim depreciation for any assets
that they add to the warehouse throughout their rental duration.
Common fit-out items include assets such as longspan shelving,
production machinery, fire fighting equipment, mezzanine levels and security systems.
If tenants want to undertake any renovations to the warehouse,
they can ALSO claim deductions for the construction costs.
Let’s take a look at an example.
Melany owns a warehouse which she bought for $920,000.
After having a quantity surveyor team assess the property,
they established that the property was first constructed in 2003. It has concrete flooring
and a few office units. She also decided to install an HVAC thermal control system.
Soon after buying the warehouse and setting up the HVAC system, Melany entered into a
lease agreement with Emily, who needed the space for her growing online retail store.
Once the lease had started, she installed metal warehouse
stacking shelves and fitted the offices with office furniture.
She also decided to move her production over to the warehouse,
so she installed her production machines during fit-out as well.
As the property’s tenant, Emily can claim depreciation for the fit-out of the office
and its equipment, the metal warehouse stacking shelves and her production equipment.
As the landlord of the warehouse, Melany can claim tax depreciation deductions for the
building’s structure and the concrete flooring at a rate of 2.5% per year.
She can also claim a deduction for the HVAC system over its effective life, which is ten years.
Claiming the warehouse depreciation made a
significant difference in both Melany and Emily’s cash flow.
Because both the owner and the tenant can claim depreciation,
it can end up being pretty complicated to work out who is entitled to claim
what - especially because warehouse owners are also entitled to claim depreciation
on assets installed and left behind by previous tenants once the lease contract ends.
This is why it's important to get in touch with a quantity surveyor to make
sure that each party claims their depreciation deductions correctly.
At Duo Tax, our warehouse tax depreciation schedules last up to forty years, provide
a range of depreciation methods and include a property inspection for the most accurate results.
All you need to do is follow these three simple steps.
Step one: get in touch with our team at Duo Tax today,
and we will ask you a few simple questions to see if your warehouse qualifies for depreciation.
Step two: you can order a depreciation schedule over the phone or via our online form,
and we will begin preparing your depreciation schedule.
And step three: within five to ten business days, your personalised warehouse tax
depreciation schedule will be delivered to you and your accountant, and you can start saving immediately!
So there you have it, warehouse depreciation deductions in a nutshell.
That’s it from me!
If you know a friend, colleague or family member needs to hear this;
please make sure you share this video with them.
And if you got a lot of value from this video, check out our YouTube channel to subscribe for
more. And make sure you click on the bell icon so that you get notified of the next video.
I’m Tuan Duong from Duo Tax, see you next time!