For What Types of Properties can Property Capital Allowances be Claimed?
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. It is not possible for an operational property to not have assets that can be used for claims.
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. A second category 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.
How does capital allowances work then? When the assets are identifies, then they should be given values and come up with the total value of all eligible assets and you are eligible to claim back an allowance of 20%. So, if you are able to claim back 20% of the total claims this year, you can claim 20% of the remaining allowance each year on the succeeding years until the whole amount is claimed. 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. Assets in the second category will take longer for the whole allowance to be claimed.
So, in summary, capital allowances are an easy yet surprisingly little known way to reclaim your money. If you are having difficulty in identifying and quantifying assets included in the property that you have just bought, then hiring a qualified surveyor will make it possible to identify and quantify assets that are eligible for claims. Then after contacting your accountant, you may reclaim your money from the treasury.
Be sure to check your eligibility for property capital allowances on your next purchase.