Fiscal incentives
Global
Program, Cost, Consultancy
Tax depreciation:
Improving returns
on real estate
Copyright of Hayes Davidson
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Who we are ...
Davis Langdon, An AECOM Company
Fiscal Incentives
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Fiscal incentives team
— passionate about
saving our clients tax on
their building projects
The fiscal incentives team is a specialist group,
experienced in identifying expenditure that qualifies for
tax relief within the real estate sector. Our work has helped
save money and improve the post-tax position for property
owners and investors.
Our international capability and knowledge of capital allowances, cost
segregation and tax depreciation regimes enables us to provide solutions
that help to improve the bottom line performance of taxpayers’ assets.
We have undertaken work for many organisations of all sizes, identifying
expenditure on qualifying assets, in compliance with the local tax rules.
Increasing the tax depreciation deduction available for relief minimises the
resulting tax liability.
Hospitals and healthcare facilities
Davis Langdon, An AECOM Company
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Tax depreciation:
Examples from
around the world
Ireland
Wear and tear allowances
Plant and machinery,
industrial and hotel building
allowances. Opportunity to
claim qualifying expenditure
on most commercial and
some residential buildings on
new build, refurbishment and
acquisitions.
United States
Cost segregation
Modified Accelerated Cost
Recovery System specifies
property and asset class
lives to assess cost recovery
under straight line and
double declining method.
Opportunity to segregate
assets from the building life
to shorter life periods.
France
Tax depreciation
Depreciated over normal
useful life, with some
permitted acceleration.
Declining balance with
coefficients for certain new
and renovated assets.
Spain
Tax depreciation
All assets except land
depreciated. Special
agreement required with
tax authorities outside of
official rates.
South Africa
Depreciation wear
and tear allowances
Accelerated depreciation
available in certain
industries. Published
"acceptable" rates by South
African Revenue Service.
Fiscal Incentives
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Sweden
United Kingdom
Capital allowances
Complex fixtures rules.
Plant and machinery and
enhanced allowances on
new build and refurbishment
projects. Opportunity to
claim on commercial building
acquisitions.
Tax depreciation
Land improvements
depreciated individually
under straight-line basis.
Machinery and equipment
pooled.
Poland
Tax depreciation
Acquisitions require contract
allocation pre-completion.
Double declining method
used for classification of
fixed assets.
Hong Kong
Tax depreciation allowances
Building allowances, initial and
annual allowances for prescribed
plant and machinery pools.
Some building refurbishment
expenditure allowable.
Malaysia
Capital allowances
Various building allowances
plus initial and annual rates
for plant, machinery and
equipment.
Singapore
Capital allowances
Land intensification
allowance in prescribed
areas. Initial and annual
allowances for plant and
machinery.
India
Depreciation allowance
Prescribed system of
depreciable assets grouped
by blocks on commercial
and residential buildings.
Opportunity to segregate assets
from the building and classify at
higher rates of depreciation.
Australia
Uniform Capital
Allowance system (UCA)
Building allowances with
higher depreciation for
plant and machinery under
alternative methods.
New Zealand
Capital allowances
Prescribed rates based
on economic life. Taxpayer
has choice of depreciation
methods.
Davis Langdon, An AECOM Company
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Why use us?
Most professional tax advisers are not
experienced in identifying and costing
qualifying assets that attract more
preferable rates of depreciation for
expenditure incurred on new building
projects, extensions, refurbishments
and purchases of (investment)
commercial property.
In addition, most surveyors are
unfamiliar with the local tax rules in
determining which assets are eligible
and the extent to which expenditure
can be relieved. The resulting cost to
the client is in paying unnecessary
tax that could have been otherwise
relieved or deferred.
Our team is professionally qualified
and technically equipped to classify
building assets that provide tax relief
which comply with local tax rules of
the country. Our input is focused on
increasing the saving and improving
the project cash flow and net benefit.
The resulting savings improve the
working capital for your business.
Our history of operating in
international jurisdictions and our
worldwide capability and knowledge
of tax depreciation regimes enables
us to provide local solutions in Africa,
Australia and New Zealand, Europe,
the Americas and Asia.
Working alongside your existing project
delivery team, we provide high-level
strategic consultancy from inception
to enable informed decision-making
at the financial feasibility stage,
through more detailed advice, option
appraisal and assessments as the
design and construction proceed. We
add value throughout the real estate
cycle, leading to significant reductions
in overall tax liability. Our input can
also promote the higher rates of
tax depreciation now commonly
associated with water and energysaving technologies, where there is
a desire to comply with sustainable
rating tools, such as LEED, BREEAM,
BEAM and Green Mark.
Our input is
focused on
increasing the
saving and
improving the
project cash flow
and net benefit.
The resulting
savings improve
the working capital
for your business.
Fiscal Incentives
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Left: Manufacturing,
industrial and distribution
warehouses Below: Data
centres and specialist
buildings Bottom: Hotels
and leisure
Davis Langdon, An AECOM Company
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What we do
Modern commercial real estate
contains a large number of businessspecific installations, equipment,
apparatus, fittings, plant and
machinery, which can be depreciated
over short- to long-term periods,
depending upon the local tax rules.
Some regimes offer a flat building
rate, which does not always reflect
the differential life cycles over which
components of the building depreciate.
By identifying and classifying the
expenditure into the correct category,
the value and timing of tax reliefs can
be significantly improved, freeing up
essential working capital. Some of
the key aspects and benefits of our
thorough service include:
–– An early cash flow forecast of
potential savings, reflecting the
expected value and timing of any
eligible expenditure; so the value
of our input can be measured at
inception.
–– A review of the local legislation to
identify the criteria for claiming
tax relief as well as identifying risk
factors to be addressed.
–– Identifying project-specific
opportunities for relief, available
incentives and particular assets
that may qualify for increased tax
deductions.
–– Increasing and improving the tax
deduction within the legislation
without raising the risk profile,
through an auditable process and
consistent quality of product.
–– Utilising our broader access to
global construction cost data to
ensure accurate and unequivocal
segregation of costs.
–– Providing a detailed cost
segregation study, with supporting
documentation and a clear
substantiated document, reconciled
to statutory expenditure records
as important evidence for the
deductions.
–– Liaison with client treasury
teams and in-house or external
local tax specialists as required,
supporting the study during its
passage through statutory tax
filing and enquiry periods. We
will respond to any enquires from
revenue authorities, as well as fully
disclosing any working papers.
Modern commercial
real estate contains
a large number of
business-specific
installations,
equipment,
apparatus, fittings,
plant and machinery.
Fiscal Incentives
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Types of projects
There are significant opportunities
to reduce the tax burden on the
investment in real estate assets by
owners and occupiers. We are familiar
with all sectors, with experience in
new build, refurbishments, fit-outs
and acquisitions:
–– Commercial offices
–– Shopping centres and malls
–– Hotels and leisure
–– Data centres and specialist
buildings
–– Manufacturing, industrial and
distribution warehouses
–– Hospitals and healthcare facilities
–– Energy generation and distribution,
including renewable sources
–– Private residential.
Shopping centres and malls
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Next steps ...
If you are interested in seeing what
the fiscal incentives team can do for
you, please call +44 (0)20 7061 7000 or
email one of our specialists below:
rachel.sanders@davislangdon.com
paul.farey@davislangdon.com
heather.atkins@davislangdon.com
richard.whittaker@davislangdon.com
All global enquiries are initially
handled by London and then passed to
the country team.
Energy generation and distribution,
including renewable sources
Davis Langdon, An AECOM Company
About AECOM
AECOM is a global provider of professional technical and management support services
to a broad range of markets, including transportation, facilities, environmental, energy,
water and government. With approximately 45,000 employees around the world, AECOM
is a leader in all of the key markets that it serves. AECOM provides a blend of global
reach, local knowledge, innovation and technical excellence in delivering solutions
that create, enhance and sustain the world’s built, natural and social environments. A
Fortune 500 company, AECOM serves clients in more than 140 countries and has annual
revenue in excess of $8.0 billion.
More information on AECOM and its services can be found at www.aecom.com.
Program, Cost, Consultancy
http://www.bankingtaxfinance.com/international.aspx
www.davislangdon.com
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