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Lease property depreciation and tax

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akikris

Business

25 Points Posted on 12 October 2014

Hello,

I plan to take a building on lease (i own a LLP) from an individual owner for 10 years @ Rs 180000pa and plan to lease it to business for Rs 240000pa.

a. What all expenditures I can claim for tax deductions (e.g.- Municipal tax, property tax, depreciation on building, building maintainance, fixtures etc).

b. How to treat depreciation on the building and the structural changes made.

c. I am taking a deposit of one year rent as deposit which I will be using to make necessary structural changes, painting and fixing etc. And at the end of the business lease, this deposit will be given back. Can I amortize these expenses?

d. What tax benefits and treatments will the lessee (the individual) receive?

Thanks.

Replies (1)

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

997 Points Posted on 13 October 2014

In your case if you take such property on lease for more than 12years you are liable to pay tax under the head Income from House property and you can claim only municipal taxes provided if it is not your principal business. As in your case it is 10 years, you are liable to pay tax either Income from Other sources or Income from PGBP in which you can claim Municipal taxes, property taxes and repairs as well. In all cases you can not claim depreciation as you can cliam premium paid as expenses in profit and loss a/c. you can not claim depreciation under the house propetry for the reason being you can have 30% standard deduction.Thank you.