For What Types of Properties can Property Capital Allowances be Claimed?
There are assets in a commercial property that is for sale or lease and if a company or any individual decides to buy, improve, or lease that commercial property, then, the company or the individual can claim or can be eligible to receive capital allowances on these assets. 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. When there are tools or assets used for the business being done within the structural framework, then these are the assets referred to and not the structure housing them. So, for example you bought a factory that contains a refrigeration system but if you will not use that facility, then you cannot make a claim against it but you are eligible for capital allowance if you continue using it for your current operations.
Vehicles, large tools, machinery, furniture, furnishings, computers and telecommunications equipment, electrical goods, safety and security equipment, software with working life of more than 2 years, bathroom equipment, swimming pools, storage equipment and more are the assets that you can use and claim allowances for. 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.
Except for the inefficient cars, these assets are an integral feature of the property which fall under the second category.
How does capital allowances work then? Once the value of the assets have been quantified, they may be claimed back at the writing down allowance of 20%. What this means is that 20% of the remaining allowance can be claimed every 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 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. 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.