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Are you missing out on the tax benefit of recent disposed or abandoned assets often referred to as scrappage allowances. It is common to refurbishment or replace assets as they age and deteriorate, however  property investors often overlook the tax benefit of write offs on original assets.

Building assets are depreciated through either Capital Allowances at varying rates or Capital Works at either 2.5% or 4% annually. All building assets will have a written down value at a point in time, and should be written off once that asset is   disposed, removed or abandoned.

Typical assets may include any of the following:
It is not possible to calculate write offs simply from capital expenditure invoices alone. Koste will carry out a detailed calculation based on historical expenditure of those assets.

At Koste we have an experienced team  of Quantity Surveyors
and Tax Professionals who assist our clients in the calculation of building works which may have been demolished or abandoned over the years. Check you Tax Depreciation Schedule is correct and up to date.

“For every $10,000 spent
on Capital Works with the current annual
tax  depreciation of 2.5% it will take
20 years to write down just over half’’

The picture shown above was taken in March 2014 and is the remains of Pacific Fair located at Broadbeach, ready for plans to turn into a new shopping centre.

It is common for clients to oversee making the necessary adjustments of the tax position once assets have been removed or demolished. Clients may continue to depreciate assets these assets up to a period of 40 years in some cases.

Koste provide a service to review capital expenditure and to match against existing assets to ensure the correct balancing adjustments and write-offs are reported. Whether the property is a large commercial office development or a small high rise apartment, the same principle applies.  

Example: A tenant fit-out with an original cost of $400k is demolished after 4 years. The owner has claimed depreciation allowances totalling $185k  leaving a written down value of $215k. The owner can claim the WDV of $215k as an immediate write off.