Finding 15% of Wear & Tear Allowances, resulting in a R1.6m tax saving in first year

Purchase of Office Building

Instructed by a listed property company client to advise on the availability and level of Wear & Tear Allowances following their purchase of an office complex for R290million.

Firstly, we ascertained that the buyer had an entitlement to claim and that they were not restricted by a previous owner’s claim.

We then carried out a detailed property inspection to identify the qualifying assets and to enable us to estimate a replacement cost for the building and subsequently prepared a Wear & Tear Allowances claim as an apportionment of the purchase price.

The total level of Wear & Tear Allowances amounted to in excess of R45million, being some 15% of the purchase price, and resulted in a tax saving in the first year of approximately R1,600,000 and over the first three years of ownership of some R4,900,000.