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Depreciation on Commercial Buildings

In 2011, the government changed legislation to remove depreciation being claimed on all buildings. 

Due to Covid-19, the government have done a U-turn on this decision and from 1 April 2020, have reintroduced depreciation on commercial and industrial buildings. The applicable depreciation rates are 2% diminishing value and 1.5% straight line. 

Depreciation is being reintroduced to encourage investment into buildings, support short term cash flow and promote long-term economic recovery.

Residential buildings are not part of these changes and depreciation will still not be allowed (this includes residential rental properties).

Depreciation claims on buildings used for short-term accommodation (Airbnb, book a batch style accommodation and boarding houses) will depend if the building is viewed as commercial or residential and is on a case-by-case basis. 

In some situations, depreciation is only a timing deduction. If the building increases in value over time, a future sale may trigger depreciation recovery (and result in tax to pay on the depreciation recovery income). 

Contact Us

Contact Tim Doyle or Jane Evans today to discuss your commercial building depreciation (or any other matter) on 07 823 4980 or contact us. Our office is in Cambridge, NZ, but distance is no problem. We have many international and national clients.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.