All Topics / Help Needed! / tax claims on a build & sell investment property???

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  • Profile photo of natcatnatcat
    Member
    @natcat
    Join Date: 2010
    Post Count: 2
    March 19, 2010 - 8:32 am

    Hi Guys,

    I’m just starting out in investing & just about to purchase a block of land 205-220 000 & build a house 220 000 so spending 420 000.

    Have done homework on recenty sales & hoping to sell for 500 000 or over

    Just wanting to know what I can claim on tax for this property, & yes I know if I build & sell within a year the CGT implications, but wanting to borrow the money then sell as quickly as possible…and if all goes well do another.

    Does anyone know what I can claim tax on…ie interest, any building costs, turf, legals?

    Thanks for responses in advance

    natcat :)

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674
    March 19, 2010 - 10:37 am

    Are you referring to capital gains tax?
    There are a number of elements to the cost base for capital gains tax.
    (cost base is subtracted from capital proceeds to work out gain)
    http://www.ato.gov.au/individuals/content.asp?doc=/content/36557.htm&page=2&H2

    You cannot claim to reduce your normal income tax unless the property is producing an income (rent).
    Also you can't claim expenses by adding to cost base if you are trying to claim expenses against rental income either
    (known as double dipping)

    Capital gains is not regarded as income by the ATO in regards to claiming expenses against other earned income – when it comes to reducing income tax
    If you made a capital loss you can't reduce your income tax either
    even though they add capital gains to your assessable taxed income and work out your new tax amount.

    This is based on pre – henry tax change tax laws that may change due to the henry report on the way Australians pay tax in the future.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 19, 2010 - 11:52 am

    If you do it with the intention of selling then CGT won't apply and it will be income tax (ie no discount).

    Generally you can claim anything associated with building the property and holding costs, travel costs, accounting advice etc.

    Don't forget to factor in GST in your calculations too – you will need to charge the buyer 10% GST>

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 3 posts - 1 through 3 (of 3 total)

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