All Topics / Legal & Accounting / Holding land as IP – Claimable deductions

Viewing 3 posts - 1 through 3 (of 3 total)
  • Profile photo of david4000david4000
    Member
    @david4000
    Join Date: 2011
    Post Count: 21
    September 16, 2011 - 1:22 am

    Hey guys,

    I'm looking at buying a block of land for my 3rd IP. I'm planning on buying the land and not building on it for 6-12 months after settlement at least.

    My question relates to the expenses I incur while holding the land as an investment without a house on it – as I am purchasing it for investment am I able to claim the interest expenses on the loan, the water supply, council rates etc even though it is not producing any income?

    Cheers

    Profile photo of mike hmike h
    Participant
    @mike-h
    Join Date: 2005
    Post Count: 18
    September 17, 2011 - 1:13 am

    Hi David,

    Generally, if the property is not producing income you would capitalise the ownership costs. This means that you cannot claim any deductions for them in the year they are incurred, but they are added to the cost base of the property. When you sell, the cost base will be higher so you will make a smaller capital gain.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 17, 2011 - 1:27 am

    But, following the case of Steele v FCT the ATO has released a ruling stating that holding costs could be claimable against income if the intention is to construct a property for rent.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.