Depreciation on Buildings

Posted: 16th May 2011

Under the new Depreciation legislation announced on 19 May 2010, which prevents a depreciation claim for buildings, a landlord cannot get a valuation done to split the building fit-out separately from the building cost and depreciate this separately, unless it is done at acquisition. 

 This rule applies from the 2011-12 income year and was part of the Taxation (GST and Remedial Matters) Act which was enacted on 10 December 2010. The new rule will allow commercial building owners, who did not itemise building fit-out separately from the building at the time of acquisition, to amortise up to 15% of the building's adjusted tax book value as at the end of the 2010/11 year at 2% straight-line per year until the building is disposed of.

Further, there is no depreciation recovery on disposal of the building, relating to any fit-out depreciation claimed under the above rule.

 For further information, please call Sudhir Lala on (09) 308 4055 or email at Sudhir.lala@tbag.co.nz