All Topics / The Treasure Chest / Tax deductibility of due diligence expenses

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  • Profile photo of peterppeterp
    Member
    @peterp
    Join Date: 2003
    Post Count: 307
    March 16, 2003 - 12:33 am

    Hi – It sounds like a dumb question but I’ll ask it anyway.

    I haven’t bought an investment property yet. Are all my costs of diligence/research (eg books, trips to look at property, market reports, long distance coach/train travel to places I’m researching) tax deductible even if these were incurred before buying my first property?

    Is the situation different if I do (and pay for) the research in 2002-3 and buy the property in 2003-4?

    If one of the trips was 70% property investment and 30% leisure (as measured by nights stayed) can I claim a deduction for this in that ratio?

    I suppose what I’m really asking if whether it’s a waste of time keeping my receipts for all these little things or not!

    Peter

    Profile photo of walkernickwalkernick
    Participant
    @walkernick
    Join Date: 2002
    Post Count: 68
    March 16, 2003 - 12:50 am

    hi peter

    i probably cant help you with all your questions, but my accountant has told me that any trips made prior to signing the contract on your first property will not be deductible. he has told me that it’s probably OK to claim the travel to go sign the contract and any travel subsequent to that. as for books, etc purchased before your first property, they will most probably not be deductible. hope this helps

    cheers
    -nick

    Profile photo of tomjonestomjones
    Member
    @tomjones
    Join Date: 2003
    Post Count: 7
    March 17, 2003 - 3:48 am

    Hi,

    I was under the impression (although my accountant hasn’t confirmed this), that all education expenses are tax deductable as long as you purchase at least one IP before the end of financial year in which you occur the expense.

    Does anyone have any definates on this? Steve (being the great accountant you are), any ideas?

    Thanks.
    Paul

    Profile photo of tomjonestomjones
    Member
    @tomjones
    Join Date: 2003
    Post Count: 7
    March 17, 2003 - 4:47 am

    I just spoke to my accountant about the education expenses, and he said that technically you can’t claim unless you show they are used to bring in income. So if you don’t have an IP now then you can’t claim for them.

    But he also said that you could factor them into the costs of buying your first property….

    As for the other expenses, I’m not too sure, although it makes sense that you can claim the due diligence as part of the costs of purchasing a property.

    Thanks.
    Paul

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