i have been told conflicting things re claimimg the council and water rates that were paid in advance on settlement of the purchase of an investment property. 1 they are part of the base cost so therefore cannot be claimed until the property is sold. 2. they are claimable in the first year as they are an expenditure against the investment property. who told me 2 diffrent accountants.
I would gravitate towards the one who says its a holding cost. At the end of the day it might make a couple of hundred $ difference but I would prefer to be claiming rather than amortising the cost.
I’d be in agreement with the second option as well…
For the first option:(quoting from ATO website) The cost base and reduced cost base of a property includes the amount you paid for it together with certain incidental costs associated with acquiring, holding and disposing of it (for example, legal fees, stamp duty and real estate agent’s commissions). Certain amounts that you have deducted or which you can deduct are excluded from the property’s cost base or reduced cost base.
So u see that legal fees, stamp duty, commissions etc can be added to the cost base.
As for council rates, see: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00270214.htm&page=9&H9
Here you will clearly see that council rates are deductible immediately in the tax year they were incurred.
I might suggest accountant #1 may not be the best partner for a property investor…
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