I am currently seeking professional financial advive but if anyone could help it would be appreciated.
Here is my dilemma, I bought a block of land over 15 months ago for 240k, 250k after stamp duty, i have a loan for 286k, the extra 36 k was to pay the repayments on the land for 12 months then sell the land and make a small profit(big mistake i now know this) and the titles are in my wife's and my name. My wife gave up work 14 months ago to raise our daughter. I want to know if i sell the block at a loss can i claim the interest only repayments/rates etc, and how much of them can i claim? i currently earn around 120k a year if this matters. I am also considering building a house and renting it, and this would take the mortgage to 500k but i would have a return in rent of about 1400 per month after fee's, when complete the house would be worth around 500- 550k and the land is worth at the moment 255k, any help would be appreciatedHi
It seems that the interest etc paid to date is likely to be considered a capital cost rather than an expense to offset other income.
If selling the block doesn't provide enough to payout the loan it is very unlikely future costs will be offset against income they are likely to increase the Capital Loss on Sale of the land.
Remember Capital loss can only be offset be capital gains not ordinary income.
If you crystallise this capital loss (which can be carried forward to offset capital gains in future years) then you will need to look at other investments where you can use this up going forward.
Managed share funds and managed property funds often will distribute capital gains as part of their annual distribution – therefore using up the carried forward loss and providing cashflow that won't increase tax.
There are a number of issues to consider.
Best of luck.
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