Hotel gyms are a great place for health-conscious guests to get active and work up a sweat while staying at a hotel. But expensive gym equipment, air conditioning, surround sound and matting can leave hoteliers sweating over the initial outlay and maintenance costs.

Unfortunately, research suggests that around 80 per cent of owners fail to maximise the deductions available and therefore miss out on thousands of dollars.

To ensure you’re aware of the deductions you’re entitled to and help to manage the costs associated with owning a hotel, here are the basics of depreciation.

Legislation outlined by the Australian Taxation Office (ATO) allows owners to claim the wear and tear on a building and its contained assets as a tax deduction called depreciation. Depreciation is available to all owners of income producing properties.

By claiming depreciation, hotel owners essentially reduce their taxable income, meaning they pay less tax. Additionally, the fee to obtain a tax depreciation schedule to cover the lifetime of the property is 100 per cent tax deductible.

An investor does not need to spend any money to be eligible to claim depreciation. As such, it is often described as a non-cash deduction. It is important that depreciation is not overlooked as it can save investors thousands of dollars each year.

Let’s take a look at some of the first-year deductions that investors can claim in a hotel gym. As you can see from the above infographic, there are substantial deductions to be claimed within a hotel gym. In the first full financial year alone, the owner of this hotel can claim a massive $29,640 for the gym equipment, $5,120 for the matting, $11,400 for the building, $675 for the blinds, $1,800 for the TV sets, $1,280 for the surround sound, $4,160 for the air conditioning, $500 for ceiling fans and $788 for lights.

Keep in mind that this is not an exhaustive list of the assets contained within the gym and these deductions make up only a portion of what an investor can claim.

From the depreciable assets shown in the infographic, an investor could claim $55,363 in deductions in the first year alone. If you consider that you could save $55,363 in the hotel gym in the first year, think about how much you could save over the life of the property (forty years) across all rooms in the hotel.

It is essential to obtain an ATO compliant tax depreciation schedule from experienced Quantity Surveyors in order to maximise your deductions and improve your cash flow. BMT Tax Depreciation have completed more than 600,000 tax depreciation schedules across all property types.

To learn more about the depreciation deductions available in a hotel or any commercial property, visit the commercial property depreciation page and read BMT's commercial capability statement.