Are you taking full advantage of Common Property Deductions?

Common property has been identified by the Australian Taxation Office (ATO) as areas within an apartment complex or development that are shared between owners. Common areas are nominated sections of a complex which all owners are entitled to utilise. 

Common property areas:

•Driveways

•Carpark areas

•Foyers

•Stairs

•BBQ areas

•Gymnasiums

Common plant & equipment:

•Lifts

•Lights

•Pool and spa pumps

•Common fire alarm systems

•Gym equipment

•Air conditioning

How do common property entitlements increase the depreciation benefit?

Unit owners can save thousands of dollars each year by claiming depreciation on common property within the apartment complex or development.

Common property depreciates in the same way as any other part of the property. Plant & Equipment items (Division 40) in common property will depreciate according to effective lives, which are determined by the ATO. Capital Works allowance (Division 43) relates to the structural portion of common property and depreciates over 25 or 40 years, depending on the construction date. A taxpayer’s percentage of ownership for common property is calculated using unit entitlements commonly found on the strata plan. The portion of a common item owned is considered an asset in its own right and is depreciated as such. Claiming a percentage of the depreciation on common property adds to the total depreciation claim.

How is a unit owner’s entitlement to common property usually determined?

A unit owner’s entitlement to common property correlates directly to their liability. Common property is usually apportioned depending on a number of criteria such as the size of the unit, its position in the development (penthouse or ground floor unit) and even its view. When a Land Surveyor initially draws up the plan for a development, they calculate each unit’s entitlements.

BMT Tax Depreciation performs a thorough site inspection of common property areas and items. Based on relevant building plans, BMT Tax Depreciation determines the owner’s entitlements. All common plant and equipment items within the development are valued and then apportioned based on the calculated entitlement. It is a complex procedure which should be handled by a specialist Quantity Surveyor.

Contact BMT Tax Depreciation to discuss any queries about common property depreciation.

Article Provided by BMT Tax Depreciation. 

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation.  Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.