Hi All,
I rang the tax department and explained that we had no income from our IP yet and asked what we could claim after settlement of land last Dec 2004.
They have said that as long as the intent is to rent you can claim the interest on the loan, borrowing costs and travel expenses – in fact all the normal outgoings you would claim (against other assessable income – eg wages or income from other IP) on an income producing or available for rent IP !!!Hope this assists others at tax time
Judy Cooke
Mikala
Is this also the case with an IP under construction ?
Regrow
You are a fool for 5 seconds if you ask a question, but a fool for life if you don’t.
I do not think this is completely correct. I would recommend a discussion with a qualified accountant.
This topic has been the subject of an ATO decision several years ago. Our acountant, Mark Williams, has also confirmed that it is correct, including for IPs under construction. Some conditions need to be met, such as the building being constructed within a reasonable time of purchasing the land.
Wake
12 months from memory is all the grace you get..
“Money is a currency, like electricity and it requires momentum to make it Effective”
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Is that 12 months from purchase of land that the house has to start construction or finish of construction?
Thanks Regrow
You are a fool for 5 seconds if you ask a question, but a fool for life if you don’t.
Originally posted by Regrow:Mikala
Is this also the case with an IP under construction ?
Regrow
You are a fool for 5 seconds if you ask a question, but a fool for life if you don’t.
Judy Cooke
Regrow,
Most definitely – that is our situation and why I rang the taxtion department to find out – I spoke to a taxation dept IP specialist there.
I also asked the question regarding time involved ( for future reference) and they said that they did not have a definitive time as each case is individual, They did mention that they had allowed deductions for one situation of 6 years where the individual could prove that he had full intent to build eventually (he had house plans drawn up and various correspondence to prove that he was actively intending to build on the vacant land even though it took so long) !!Marsden,
The taxation department are the ones who are doing your assessment so they are in a better situation to decide what and what will not be allowed – my postings all started with the post “I SACKED MY ACCOUNTANT” because he did not know these could be claimed and even after I told him did not make any attempt to contact the taxtion department to get a ruling (he even had the audacity to tell me he had checked and that they were not allowed – he had actually contacted a mate at H & R Block who did not know themselves !!!)
Regards
Judy Cooke
Hi Mikala
We sacked our last accountant for the same reason – even after I told him about the ATO decision, he didn’t check it out and said “they might change their mind further down the track”. As we are about to embark on building house No. 3 we had a lot to miss out on!!
WakeIt sounds as if you guys also don’t buy into the old furphy of “If in doubt, seek independent professional advice” that’s glibly trotted out as a cure all for any situation.
Great if we were all autotrons, but when human error, laziness and inexperience / incompetence are thrown into the mix, sometimes these professionals don’t cut the mustard.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Wake,
We are in exactly the same position – about to build no. 3 so couldn’t stick with someone who not only did not know what he was doing but was not willing to find out !
It just goes to show that even though we are paying for someone else’s experience we really need to keep our own knowledge of the tax situation up to dateRegards
MIKALA
I would call the ATO. I have seen the wrong advice given by accountants. I am educating myself by getting informaton direct from the horses mouth. But one suggestion I can offer is to keep up to date with advice.
Cheers
Toni
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