It appears the ATO considers “sale to occur on exchange of contracts” (as quoted from another forumite).If this is so,& not on settlement,then are we able to start claiming costs from the contract sale date? (ie,depreciation,etc)[confused2]
Misty1
I believe the settlement date is when depreciation can commence for the new owner. The exchange of contracts/sale date represents the start of a handover of property process, and it is settlement date when the process is complete. The new owner is then in possession and able to rent the property.cheers
Tasman
Misty1
Clarification needed. When you obtain a property,if your intent is to rent that property, then you can claim costs from the date of settlement even if it is not ready for rental, eg; with house and land package you can claim expenses from land settlement date while the house is being built. You must follow through with renting when the house is complete/renovated or whatever for pre-rental expense claims to be valid.cheers
Tasman
Opps I will get it right this time. Normally you can only claim expenses from the date a property is available for rental, and arguably this occurs on settlement date. Land and house package is a special case, but I am not so sure about renovations, repairs etc.
Tasman
PS Obviously in a land and house package, depreciation expense is not applicable until the house is complete, other expenses such as interest, and council rates are applicable.
Tasman
Hmm….interesting…
This is an interesting thread, any accountants out there that can provide any other info?
going off on a tangent: What happens if you have “pre-possession” written into the contract, the property is then availalbe for rent prior to it being settled, so can you start claiming earlier than settlement?
I would definitly like to know the answer to purple’s qu too….might post it as a qu.
You can start calculation of depreciation and other deductions from the date the property is available for rent.
The date of exchange of contracts is used for capital gains tax purposes only, so for example 12 months period of ownership (if you want to get 50% capital gains tax descount) starts next day after the date of signing the contract.Vkolaj
Thanks, appreciate you reply.
Sorry,vkola,I dont understand[confused2].Can u explain,pls??
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