A Guide to Property Capital Allowances
If a commercial property is for sale and contains several assets within, then the company or the person that buys, improves or leases it can be eligible for capital allowances on the asset within the property. Most operation commercial properties would have assets that are included which can be eligible for claims for capital allowances.
To be eligible, there must be durable assets with an expected life of more than two years, which are not part of the premises themselves. These assets are those that are used for the conduct of business within the structure and not the structure itself. For example, you bought a factory with existing refrigeration plant but your business in that factory does not need it, then you would not be ale to make a claim against it.
Although these are some assets that are not eligible for the allowance, there are still many things that are eligible for it and these includes vehicles, machinery, large tools, furnishings, furniture, electrical goods, computers and telecommunications equipment, software with working life of more than 2 years, safety and security equipment, swimming pools, bathroom equipment, storage equipment and more. There is another category that are also eligible for capital allowances and this includes inefficient cars, power supply systems, water supply systems, lifts, escalators, and people movers.
Things falling into the second category are integral features except the inefficient cars.
If you have already seen the assets that are eligible for capital allowances, what do you need to do next? Once the value of the assets have been quantified, they may be claimed back at the writing down allowance of 20%. So when you claim back 20% of the value this year, you can claim 20% of the remaining allowance on the succeeding years, each year. The writing down allowance for the second category is slightly different because the amount you can claim each year is just 10% of the allowance or remaining allowance in subsequent years. It takes longer to claim the whole allowance for assets in the second category.
So, in summary, capital allowances are an easy yet surprisingly little known way to reclaim your money. IF you have just bought a commercial property and you think that there are assets that can be eligible for claims, then what you can to is to send a qualified surveyor to identify and quantify claims. The help of a good accountant can be useful in reclaiming your money from the treasury.
If you are thinking of buying a commercial property, then you can be eligible for property capital allowances.