If you use a property to run your business—whether you own it, lease it, or use part of your home—it’s important to understand how that affects your taxes. The way you use property can change what you can claim, how you report your income, and what happens if you sell the property down the track.
Here’s a simple guide to help you stay on top of it all.
What Does “Using Property for Business” Mean?
This applies to you if you:
- Own or lease a shop, office, clinic, or warehouse
- Work from a commercial property you’ve bought
- Run your business from a part of your home (like a garage, studio, or spare room)
Even if you’re only using a section of the property for business purposes, it still counts—and the ATO expects you to report it correctly.
If Your Business Owns the Property
If your business has purchased a property (either directly or through a separate company or trust of yours), you may be able to:
- Claim deductions for expenses like interest on loans, maintenance, and council rates
- Claim depreciation on the building or assets inside it
- Register for GST and claim GST credits if applicable
If You Personally Own the Property and Lease It to Your Business
Some business owners choose to personally buy the property, then lease it to their business. This can work well, but you need to report the rental income you receive in your personal tax return.
Make sure the lease arrangement is clearly documented and at market value.
If You Lease Property for Business Use
Leasing instead of buying? You can still claim a number of business expenses:
- Rent payments
- Utility costs if you’re paying them
- Fit-out costs / depreciation (e.g. shelving, air conditioning, signage)
- Some legal or leasing fees
Using Part of Your Home for Business
Many small business owners conduct their businesses from home. If that’s you, you can still claim some expenses, but you’ll need to apportion them between personal and business use.
For example, if you’ve dedicated the garage to operate as a hairdressing studio or set up an office where you meet clients and deliver services, you can claim a percentage of your:
- Running Costs
- Electricity, internet and other utilities
- Cleaning
- Repairs and maintenance
- Occupancy Costs (only if the area is clearly more than just a home office)
- Rent (if you’re a tenant)
- Mortgage interest and rates (if you own the home)
- Building insurance
- Council rates
Tip: Running your business from home will expose the relevant floor area percentage of the home to Capital Gains Tax when it is sold in future. This is regardless of whether the occupancy costs are claimed as the business expenses or not.
Selling a Business Property
Selling a business premises is subject to Capital Gains Tax. However, you might qualify for small business CGT concessions, which could reduce the tax—or even remove it completely—if you meet the requirements.
There are a few options here, like:
- The 50% active asset discount
- The 15-year exemption
- Rollover concessions (if you’re reinvesting in another business asset)
Before selling, it’s a smart move to speak with your accountant to make sure you meet the conditions.
Final Thoughts
Whether you’re leasing, owning, or using part of your home for business, property decisions can have a big impact on your tax position. While there are valuable deductions and tax benefits available, there are also important rules to follow.
To make the most of your business property and stay on the right side of the ATO, it’s worth getting professional advice. Reach out to Chan & Naylor before making any big moves—so you can plan smart and protect your investment.
About Chan & Naylor
Since 1990, Chan & Naylor has partnered with business owners and property investors in managing their taxes and building a tax-effective wealth. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your financial goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business and property tax.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
