I have conflicting advice on whether borrowing, purchasing, loan interest & other expenses are tax deductible on vacant land to have a rental property built on it.Any advice would be greatly appreciated.I LOVE this forum…..[inlove]
Hi Misty 1….
Yes ! All costs in the persuit of income are tax deductible…. don’t forget all the councilfees etc
Billfromoz
watch for those that are consider capital improvements as a property owner.
Separation of assets: eg house built onto vacant land result is combined asset.
It is separated. If bought before 85 and improved, the improvements are CGT. After 19/9/85 an indexed cost exceeding 50k and on disposal of the asset the indexed cost exceeds 5% of considered value. Eg construction of buildings, extensions
The land acquired after 19/9/85 adjacent to land bought beforeImprovements to land deemed to be separate assets under the ACT
Elves
” a blind man may see what a sighted man may not”
Hi Misty,
Agreeing with Bill on the proviso that there is not an inordinate amount of time between land purchase and commencement of ‘work’ towards the construction of a rental property.
If questioned by the ATO you would have to demonstrate that there was intent to construct an income earning asset – for your own peace of mind I wouldn’t leave it too long. Maybe recorded conversations and meetings with relevant people, building contracts, letters seeking building approval etc. would suffice.
As with all matters tax and legal seek professional advice.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanx for responses everyone, however, I’m still confused!! My situation is that i stupidly hired the services of an uninformed bookeeper/accounting co (of which i now believe the accountant never once offered guidance),who told me interest on my loan for vacant land wasnt deductible.So,being uninformed myself,took this to be true,& during the period it was vacant, she didnt claim ANY expenses! This has been over a period of a few years,but during that period a portable unit was installed,& collected rent,so was temporarily considered deductible, before the new house was built,now collecting rent.So, does anyone PLEASE KNOW if,during the periods the acnt DIDNT claim interest, & other expenses (ie; when land was vacant) whether i can still some how claim these costs??? Perhaps they can be claimed in later years? Or as a capitol expense, & therefore depreciated at 2.5% in the following years that i havent yet had a return done on?? Pls help!! I am desperate for clarification/ confirmation.
There is some hope! I have recently calimed some expenses from 3yrs. ago (just found a whole lot of reciepts, over $2,000 – AAGGHH!!!), and we will be claiming them for this yr (got the okay from my accountant). Of course the ATO can deny them but I pretty confident.
But do get a good accountanct to see how much you can claim back, and if you can only claim one or two years, I guess consider it a learning experience… Get advice from the horses mouth (not the jokey!).
Rgds.
Lucifer_auI think you can amend tax returns going back four years.
See an accountant.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon,
And with this financial year drawing to a close – time is of the essence for those who have picked up new information that can be back-dated and applied to previous returns.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Misty1
I bought land 12 years ago with the intent to build, I was also told I could not claim expenses. In the following few years I got an engineers report and spoke to a few companies re building.
Then 2 years ago circumstances changed and I realised it would be too long before I could build and therefore not worth ongoing expenses.
When I sold I asked again about expenses and this time was told I could claim them all before working out the capital gains.This worked quite well and although I only made about the same in profit as a bank deposit at least I did get the expense benefit back.
misty/Misty1/all
misty’s story is similar to something I read in one of the Tax Guides (nope – I don’t have a life [
]), where if you own a holiday house, and don’t rent it out at all, you are liable for CGT, BUT, you can claim all interest expenses, rates etc. off your taxable gain! [specool]Cheers
Mel
]), where if you own a holiday house, and don’t rent it out at all, you are liable for CGT, BUT, you can claim all interest expenses, rates etc. off your taxable gain! [specool]You must be logged in to reply to this topic. If you don't have an account, you can register here.
