Capitus International - Tax Depreciation Analysis on International Property Assets

By: Capitus International  05/12/2011
Keywords: tax

In most international tax jurisdictions, in accordance with International Accounting Standards, it is possible to depreciate component parts of a property, such as air conditioning plant and lifts at different rates from the rest of the building. However, this is rarely done.

A combination of property costing, valuation and accounting skills are required to carry out this exercise effectively but most international accountancy practices do not possess these skills in-house.

This results in the entire cost of the property being depreciated at a single composite rate, meaning that significant levels of tax relief are missed.

The following example illustrates the benefit of carrying out a cost segregation analysis over depreciating the building at a single composite rate of 4%.


Call centre in Madrid with a total construction cost of €26.3m

How can Capitus help?

The following approach has been used successfully in many international property investment and development situations.

Capitus will:

  • Advise you on the tax legislation relating to the treatment of property costs relevant to the country in which you are investing.
  • Liaise with your accountants on all relevant local issues.
  • Carry out a detailed survey of the property, if required.
  • Prepare a cost segregation analysis of construction or purchase costs together with an assessment of useful economic life.
  • Submit the cost segregation analysis to your local accountants for submission to the relevant tax authorities.
  • Support the figures in negotiations with the relevant tax authorities where required.

If applied properly, this methodology will result in much greater levels of accelerated tax relief.

The information in this article was current at 02 Dec 2011

Keywords: tax

Contact Capitus International

Email - none provided

Print this page