Capital allowances for property transactions – a valuable tax relief
The subject of capital allowances is a highly complex area, but with the correct support and advice, some high-value tax benefits can arise as a result of purchasing a commercial property.
There are many assets within a property that qualify for capital allowances, such as electrical installations, heating systems and plumbing. These can represent a significant proportion of the cost of the building and so could substantially reduce your tax bill.
There are strict and complicated rules to observe in transferring certain allowances as part of the transaction, but with the correct advice from an early stage, it’s possible to establish certain essential facts to enable you to receive some very useful tax relief to mitigate the cost of your investment.
Early expert involvement is key!
It’s vital to remember that the earlier you tell us about your plans, the easier it will be to achieve your aims and get the most of your property purchase by way of capital allowances. Preferably we should become involved at pre-contract stage as we need ensure that the contract is worded correctly to maximise the tax relief available.
Your solicitors will of course be closely involved in your property purchase; we can work with them to provide the specialist tax advice required and we can also help to ensure that the correct legally-binding documentation will be in place to enable you to claim your allowances when the purchase is completed.
Key issues to be considered
There are numerous questions on capital allowances that are included within the standard commercial property enquiries your solicitors will handle, but two key facts that need to be established as early as possible are:-
- Has the seller claimed capital allowances in respect of all the fixtures within the property?
- Will the capital allowances entitlement of the buyer be affected by the actions of a previous owner?
We are here to help
Early and specialist advice is key to this extremely valuable relief and the cost of obtaining this advice is normally greatly outweighed by the tax savings. If you are considering purchasing a commercial property, please get in touch as there are many varied issues that we can assist you with.
There are matters to address in almost every property transaction but even more complexities can arise in scenarios such as:
- Intra-group property transfers
- Properties with sitting tenants
- Deals where the seller is a pension fund or other non-tax payer
- Long leaseholds purchased at a premium
Selling a commercial property?
If you are thinking about selling a commercial property, again, it’s really important to let us know about your plans as soon as possible so that we can provide the support required. Often the main concern is to protect the tax relief you’ve already gained from your property so that allowances are not clawed back after the property has been sold.
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