Hi everyone,
I purchased an vacant unimproved lot adjacent to my primary residence this year. I may sell it one day for profit, on which I would certainly pay CGT. My question is: can I deduct the legal and title fees I incurred in buying the property, since it is an investment?
Thanks,
Kevinmantismm,
Not until you sell it or until you build on it and rent it out.mantismm wrote:Hi everyone,I purchased an vacant unimproved lot adjacent to my primary residence this year. I may sell it one day for profit, on which I would certainly pay CGT. My question is: can I deduct the legal and title fees I incurred in buying the property, since it is an investment?
Thanks,
KevinNo – the costs will be included in the cost base of the land for CGT purposes. If you build on it and rent out the property, the costs remain non-deductible. You effectively get a "deduction" when the land is eventually sold.
However, depending on the size of the block, you may be able to incorporate the land into your main residence, which would mean its future sale will be tax-free (still no tax deduction for the legals and title search though). Land up to 2 hectares (including your house) can be treated as your tax-free main residence.
Eddie
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