Hi, We have an investment property that is large enough to subdivide into two lots which we intend to do to free up two parcels of land and build two new homes. We have been quoted around $7k in costs to formally approve a DA for this subdivision which includes council fees, engineering reports etc etc (not the actual headworks and levies). My question is if I pay these costs before June 30 am I able to claim as an expense for the year or is this of capital nature? Thanks in advance. Jazamite
jazamite, some will disagree with my reasoning, these would be considered capital costs as they are part of the work required in order to create the new blocks, the physical works could not take place if you had not done these works. However, in saying that, these aren't costs that can be depreciated, so they would need to be added to the 'cost base' of the land. To back this up, they are not costs which can be directly related to generating an income as this is vacant land, similar to interest costs/rates etc (unless you have found a way to derive income from vacant land eg the property is considered stock in trade as you carry on the business of land subdivisions & construction).
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