IRD favours depreciation for commercial building fit-outs

However, grey areas are likely to persist for landlords whose repairs and maintenance could be counted as capital expenditure.

A joint Treasury and IRD discussion paper, released today by Revenue Minister Peter Dunne, says there are fundamental differences between residential and commercial building fit-outs, with the value of fittings in commercial premises depreciating far more quickly and requiring a depreciation regime.

Changes announced in the May Budget this year left many grey areas for commercial property owners, most of whom are already booking one-off tax adjustments relating to the future non-depreciability of commercial and industrial building structures.

"The law would be changed to clarify that fit-out associated with commercial, industrial, recreational and certain short-term accommodation (for example motels, hotels, rest homes and hospitals) would be able to be separately depreciated," the discussion paper says.