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Tax Tip of the Month
Property Tax
Budget Report
Talking Technical
Buy an industrial building when it is 24 years old
Industrial buildings have a deemed tax life of 25 years and the purchaser of a second-hand industrial building needs to be aware of how old it is at the time the ownership changes. If it is approaching the end of its tax life, this can be advantageous for the purchaser. On the sale of an industrial building, the original owner will have all the allowances clawed back if he sells for at least the original cost. These allowances are then potentially available to the purchaser, spread evenly over the remaining life of the industrial building. Therefore, if the building is bought second-hand in the final year of its 25 year life, the whole of the original cost will be given as a deduction in that period to the purchaser, with no restriction being made to the 4% writing down allowance.
