Real estate fencing at company costs

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Does the entrepreneur have the right to include as tax deductible expenses the expenses incurred for the construction of the property fence? The matter is simple when the fence is used for the property in which the business is conducted. Then, such an expense may be included in the costs, however, certain conditions must be met, as specified below. But what if there is also a residential building in the fenced area? The easiest solution will be to use a settlement key based on the size of the property.

A building, as a single inventory object, also includes auxiliary facilities servicing a given building, e.g. sidewalks, access roads, yards, squares, fences, wells, etc. the group "Buildings and premises and cooperative right to commercial premises and cooperative ownership right to a dwelling". However, all ancillary facilities serving more than one building should be included in the appropriate types according to their purpose.

When the value of the built fence exceeds the amount of PLN 3,500, and at the same time it serves more than one real property - the entrepreneur should include the expenses incurred for its production in the initial value of a separate fixed asset belonging to group 2 "Civil engineering objects" - as other civil engineering objects and water, not elsewhere classified (291 KŚT). The depreciation rate to be adopted is - 4.5%, while the beginning of making write-offs is considered to be the month following the month in which the fixed asset is put into use.

However, if the expenditure on the construction of the fence does not exceed PLN 3,500, the taxpayer has three options:

  • not to enter the fence in the register of fixed assets, and the expenses related to it should be included in the costs of obtaining income in the month of putting it into use (Article 22d (1) of the PIT Act),

  • introduce a fence to the register of fixed assets and make depreciation write-offs on general principles, or

  • make a one-off write-off - in the month when the fence is put into use or in the next month (Article 22f (3) of the PIT Act).

Finally, it is worth discussing the issue of a building not used for business purposes - a residential building - among fenced properties. The best solution to determine an amount that would not increase the initial value of the fence subject to depreciation will be to use a settlement key based on the size of all properties.

Example

The entrepreneur completed the fencing of the area containing the real estate used for business (350 m2) and a residential building (150 m2). The value of the fence is PLN 50,000. To determine the amount that will not increase the initial value of the fixed asset, you need to calculate:

  1. The total area of ​​all properties: 350 m2 + 150 m2 = 500 m2;

  1. The part that does not increase the initial value of the fence will then be:

150 m2: 500 m2 = 0.3 -> that is: 0.3 x PLN 50,000 = PLN 15,000.

Accordingly, the initial value of the fence will be:

PLN 50,000 - PLN 15,000 = PLN 35,000