What is common property depreciation?

One thing that remains constant is the tax deductions rental properties provide to their investor owners. An added benefit is the lucrative common property depreciation deductions strata investors can claim.

What is common property?

When you own a property that’s part of a strata title, such as a townhouse or unit development, paying strata fees is part of the parcel.

These fees cover a range of things depending on the building. This can include insurances, maintenance, council rates and shared facilities maintained and funded by the body corporate. As an investor, you can claim the strata fees as a tax deduction.

Another factor to consider is the depreciation you can claim. Not only can you claim depreciation for the actual property you own, but you are also eligible to claim a partial deduction on the common property assets. These are your common property deductions. Some key examples include:

• elevators
• gym equipment
• fire safety equipment
• security cameras
• common area flooring (e.g. hallway carpet)
• garage doors.

How does common property depreciation work?

Common depreciation deductions are available on a pro-rata basis. They are established from the ownership percentage you have of the strata.

For example, if your ownership percentage is deemed as 10 per cent and the elevator holds a depreciable value of $12,000 the value your depreciation deductions would be based off is $1,200 (10 per cent of $12,000).

How to claim common property deductions

The most accurate way to claim common property depreciation is with a tax depreciation schedule prepared by a specialist quantity surveyor.

A BMT Tax Depreciation schedule includes pro-rata calculations that your accountant will use to determine your common property deductions each financial year.

To learn more about BMT and the additional services that they offer, call their team on 1300 728 726 or Request a Quote.

BMT Tax Depreciation is Australia’s leading supplier of residential and commercial tax depreciation schedules.

Bradley Beer
(B. Con. Mgt, AAIQS, MRICS, AVAA) Chief Executive Officer of BMT Tax Depreciation.

Date published 30 Jan 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.