Hi guys,
Here’s the scenario………..
Have had offer accepted on an interstate property subject to finance. Once finance is through and prior to settlement am I able to claim expenses including flying interstate/mealsaccommodation ect, to put in light fittings and window treatments to get the property ready for rental and of course meet with the property manager and selling agent.
I have been given access prior to settlement as a condition on the O&A.
Has anyone had experience with this sort of thing as I would like to get it right before I book the flight. Do you need to keep a diary?
thanks
SQ
NO, I don’t think you can claim costs such as these up front before you have settled. They can be claimed later if you ever sell the property. Check with your accountant.
If you are using a trust or are in the business of property investing, it may be a different story.
Terryw
Discover Home Loans
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Mmmm interesting Terry,
The ATO class you as owning the property from the date of acceptance of the O&A for CGT purposes so why not from an expense point of view!!
I spoke with someone at ATO regarding this and they said NO to the expense claim and NO to it contributing to my cost base so when I sell the property I cannot make a claim to offset some CGT then.
I did argue the point that I felt that it was part of acquiring the property and that we needed to meet the property manager, conveyencer and real estate agent who are all dealing with this property AND that the property is being sold without window treatments, so in order for it to be rentable, we needed to fit blinds/light fittings ect.
She said I should put in for a private ruling. Has anyone had success in this area?
Comments welcome!
sq[blink]
Hi Suzieq,
My understanding is that you can only claim expenses at the point the property becomes available for rent. So if you haven’t taken ownership, you can’t claim it. Further the amount needs to be directly in relation to earning the income so I agree with your advice received to date that you can’t claim the travelling costs.
However I don’t agree with the ATO phone advice, as I see these costs as capital in nature and relating directly to this property, so I think they should form part of your cost base and taken into consideration when/if the property is ever sold.Certainly any travelling costs searching for property you couldn’t capitalise but I think you have a case as you’ve already signed a contract to purchase the house.
Can you get a trusted friend to do the pre-settlement inspection and organise the curtains? Perhaps if you could delay the trip for 6-12 months you may be able to claim it but I’d run it by your Accountant first.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Don’t always believe what you hear on the phone when you call. Try calling 3 times to see if you get different responses.
You may be able to claim travelling costs if you could argue you are running a business of investing in property. If you are using a trust or company then this may help.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
thanks for your input everyone. I will be speaking to my accountant and yes I will ring the ATO a couple more times on this and see what responses I get. I have just got back from Melbourne (decided to go regardless of being able to use it for my cost base just for peace of mind). Anyway happy with purchase and have kept all receipt in case!!!!!
sq
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