I have one investment property and I was going to buy another one a few month ago but the building inspection report on the property came of unsatisfactory inspection report due to problem with the house my question is that I pay $400 can I claim that money on income tax return ?
I would
Monopoly, my favourite game
Hello,
Yes – you can definitely claim the building inspection as a deduction as it is a expense in the earning of your income on an investment property – it does not matter that you have earned no income yet – it is the intent which is important according to the taxation department…..see my earlier post…NO ICOME EARNED DEDUCTIONS YOU CAN CLAIM…
MIKALA
Mikala,
I agree with everything you have written except the word “an“. If you changed the word to “the” I think you’d be closer to the ATO’s position. I know it’s nit picking, but that’s what the ATO does and would be the difference between a successful claim or not.
I agree that it is the intent that counts in the eyes of the ATO, but my understanding is that along with that intent – there has to be the very real possibility of eventual taxable income flowing from that specific asset that the expense directly relates to at some later, unspecified date. Allocating the expense to another property in your portfolio isn’t going to fly. Surely if the contract to purchase an IP, and by definition the intent to earn taxable income, is dependent on “subject to” clauses and they fall over…there no longer exists an intent or possibility to earn income ??
A similar case but closer to getting over the ATO line was reported a few years back, whereby hobby farmers (who went one step further and actually owned the property) were claiming massive deductions against piddly little incomes. The ATO decided (or a court – can’t remember) that there was never a possibility that the hobby farm would ever come close to generating a taxable income large enough in the foreseeable future for the ATO to earn tax off, and therefore the farmers deductions were rejected. They had the intent, but not the capacity to generate income.
If mauricio has decided, based on the contents of the report – not to proceed, that second criteria of the capacity, has not and can never been fulfilled and therefore the expense is not deductable.
This is my understanding of mauricio’s specific situation. Would be good to have some definitive clarification.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
couple of question.
1.Was this a company, trust or individual person going to purchase.If either company or trust as far as I know can claim as a business expense looking at purchasing a investment similar to expenses to view property for redevelopment.
2.Was any paperwork exchanged prior to this report ie deposit or option if so again this would be seen as above.
If the answer to 1.Is individual then talk to a accountant about this question but also get him to structure your affairs to your requirements
once you start to get to second and third properties its probably good to talk to one (give them the its my first time routeen and they probably won’t charge for the first visit talk to a couple and go with the one you are happy with.)here to help
hi thanks for you help
individual person going to purchase
yes i did a contrat on the property subjet to building inspection all approve finance ready the only problem was the building inspectionhi mauricio
I think you need to do the last thing I sugested and have a chat to a couple of accountants or even your bank(which ever one) financial advicer to structure your affairs.
Buying property in one persons name leaves you to open for attack from creditors for my liking.
especialy for litigation and false insurance claims.here to help
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