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Is the purchase of a new business premises tax deductible?

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Initiate

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Hi there,

 

Can the purchase of a new premises (e.g. a warehouse or an office) be deducted from a businesses taxable income?
Hypothetically, for instance, if a business makes a profit of $500,000 in a tax year and also purchases a property for $500,000 does this reduce thier taxable income to $0?

My understanding is that a business can not claim this as a tax deduction because it is a capital asset and not an operating expense. Furthermore, a business can only claim expenses relating to decline in value of the building’s structure. Is this understanding correct?

 

Thank you in advance,

Simon

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Hi @sdfry 

 

Thank you for your question.

 

You are correct - it is a capital item. We have a page on our website which I think you will find very helpful. It discusses tax implications and any deductions that are available:  Buying commercial property.

 

I hope this helps

 

 

1 REPLY 1
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Most helpful response

Community Support

Replies 0

Hi @sdfry 

 

Thank you for your question.

 

You are correct - it is a capital item. We have a page on our website which I think you will find very helpful. It discusses tax implications and any deductions that are available:  Buying commercial property.

 

I hope this helps