Hi there,
If you are travelling to inspect your investment property, you can claim travelling expenses as a tax deduction. My question is, up to how many visits are claimable? I was under the impression it was only twice, or is this if the IP is interstate?
Thanks for your help
Sooshie [
]There are no problems, only solutions
Hi Sooshie,
A good guide to look at is the ATO’s Rental Properties guide.
It implies that multiple trips are allowed (even interstate) however tbey are only 100% deductible if the sole purpose of the trip is to inspect the property. If it is not 100% then only part of the costs MAY be deductible.
My view is that if you make too many trips the ATO may take the view that you are realy travelling for a holiday and the visit to the property is incidental. I think there would need to be some very specific reasons to make more than 2 trips per year.
Hope this helps.
Hi Pandora,
Thank you and welcome to the PI forum [
]!Cheers
Sooshie [
]There are no problems, only solutions
Hi Folks
What about trips OS for example New Zealand, is this deductable, to view rental properties that you have there? Say visited once or twice a year if that!
Cheers
Leigh K[]Leigh K,
I am no tax expert but I understand in general that if you are declaring your rental income and costs etc then there is no logical reason that these costs would also not be deductible. Warning: Is the ATO logical in their legislation and rulings?
What happens with CGT I don’t have any idea.
I would ask the ATO direct and get their view.
Pandora.
Hi Pandora
Thanks for your funny and informative feedback. As for CGT I understand there is no CGT in NZ however, you pose an interesting point … How is a capital gain viewed in Australia when it is obtained in another country?
Cheers
Leigh K[]Something to keep in mind is that you can definetly claim the costs of inspecting properties you are currently recieving taxable income from.
However you can’t claim the expenses for properties you are not currently claiming taxable income from, such as posisble purchases or going to renovate the property..
Also O/S trips are also definetly deductable when inspecting properties you own. Also O/S trips to confrences and workshops related to your profession or buisness (in the sense that you gain taxable income from the knowledge learnt) is also deductable.
Hope his helps….
PeteP.S. I am no tax expert but have just finished studying this topic at UNI and this is my understanding…well hey i did pass the units…
hi Willi
What if you have several properties and you had a business of investing in property. Could you then argue that this is an business expense and then cliam the costs associated with travel relating to viewing potential purchases?
Thanks
Terryw
[email protected]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
TerryW
Good point…I would have to agree with you on that one.I can’t see why this would not be allowed…
Pete
Hi Willi
I wonder what you think of the following:
1. Visit country town and spend a week there looking for properties and end up buying one
(in March). It settles in May, start receiving rental income before June 30.Though the stay was one week its sole purpose was to buy property. Am I right in assuming that all this travel and accomodation could be claimed?
2. As for 1. but don’t sign purchase docs until July 1.
3. As for 1, but sign purchase docs in June, settle in July and get tenants later.
4. As for 1, but settle in June and get tenants on July 1.
Would 2, 3, 4 not be claimable, or is there some mechanism to claim previously unclaimed deductions incurred the previous year?
thanks, Peter
I am having trouble wording this response..so please bare with my jumbled reply….
The tax department look at the issue from a physical time standpoint rather then a tax period standpoint. That is you must be physically be receiving assessable income from the asset (IP) prior to being eligible for deductions.
Basically, all costs incurred prior to purchase (or gaining assessable income) are classified as a capital expenses and possibly allowed to make up some of the cost base of the asset when calculating the capital gain made on the asset.
So basically in that case you outline, even though in some scenarios, you look,purchase and receive income all in the same tax year is only coincidental. It actually has to happen in chronological order, unless your circumstances are that similar to those proposed in TerryW’s post.
Hope this helps…let me know if it didnt answer you question…
Also there are ways to claim previously unclaimed deductions.Speak to your accountant on that one, it has +/- side-effects…
Cheers
PeteInteresting topic, and something that was covered in a workshop I attended this weekend…
I heard a fantastic concept that I’d never thought possible, and I’d suggest following this up..
The idea of using a hybrid/family trust to allow you to make many tax deductions you couldn’t otherwise do.
Just one example is travelling interstate and having an allowance of say $200/$250 per day to do whatever you wish (food, clothing, wining/dining, accomodation, etc).. for the purposes of travelling to inspect properties (infrequently etc as you’d expect but the daily allowance doesn’t have to be itemised or require receipts for each individual expenditure) there are some other neat things you can do as well..
Check out http://www.gatherumgoss.com/shopping.htm and read the info on Trust Magic.. worthwhile investigating..
Joe
Willi,
I can see why you passed – you seem to know this stuff pretty well.
Petters
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