Tax Advice for Land for Investment Property

man37 on 10/09/2019 - 07:01

Hi everyone,
I purchased land for an investment property to build on. The land settlement was in mid June 2019. I need to lodge tax returns for 2018-19 and was wondering what deduction can I claim?

The following items are appearing in home loan statements for 2018-19.

  1. Govt title search $10
  2. Mortgage Registration Fee $110
  3. Transfer of Land Fee $660
  4. Stamp duty $9800
  5. Interest $300

I always did tax returns myself before but this time I'm thinking if I can claim deductions then should go to tax agent. Need your advice.

Thanks in advance for your valuable suggestions.

Financial

Comments

  • MrHyde on 10/09/2019 - 07:30
    +6

    I would think you can't claim any deductions.

    Deductions can only be claimed from the point your investment property is available for rent. If you've only got land, then you are not getting rent, nor is it available for rent.. so no deductions.

  • Hithere on 10/09/2019 - 07:43
    +9

    I'm thinking if I can claim deductions then should go to tax agent. Need your advice.

    My advice is to do what you are thinking - go to a tax agent.

  • ihbh on 10/09/2019 - 07:45
    +4

    Increases cost base (by adding to it) and hence reduces CGT when you come to sell the property … if it ever becomes an investment property.

    To do now: file details away.

  • GoldenDragon888 on 10/09/2019 - 07:59
    +1

    Have a read of this. It’s a guide on rental properties from the ATO
    https://www.ato.gov.au/uploadedFiles/Content/IND/downloads/R…

    • poboy on 10/09/2019 - 11:41

      EXPENSES FOR WHICH YOU CANNOT CLAIM DEDUCTIONS

      Expenses for which you are not able to claim deductions include:

      1. acquisition and disposal costs of the property
  • brad1-8tsi on 10/09/2019 - 08:20

    You can't make deductions unless you had income off the asset.

    The expenses would be part of the cost base for CGT purposes when you sell.

  • nicolemcmilllon on 10/09/2019 - 08:32

    You can claim the interest and any other council rates etc paid provided the house is being built as soon as practically possible and you plan on renting the house out as soon as it is built and available.

    Put the interest in Item 21 on your tax return. $300 isn't going to do much though so you may want to consider ignoring it alltogether for the 2019 year and go to a tax agent in 2020.

    The other expenses incurred will add to the cost base of the property for when it comes time to sell it.

    :)

    • macfanboy on 10/09/2019 - 12:45

      nicole,

      https://parlinfo.aph.gov.au/parlInfo/download/legislation/em…

      Example 3.5: New residential premises available for rent
      Anna purchased a block of vacant land and built new residential
      premises on it. Occupancy permits are issued for the residential
      premises once the building is considered suitable for occupation and
      the building is actively made available for rent.
      Anna can deduct the costs of holding this block of land to the extent
      expenses are incurred once the property is legally available for
      occupation and is leased, hired or licensed or otherwise available for
      lease, hire or licence

      • nicolemcmilllon on 10/09/2019 - 14:06

        Don't come into effect until 1 July 2019.

        • macfanboy on 10/09/2019 - 14:29

          True, So even a smidgen for borrowing costs…

          Also I was referring to the cost base, it looks like you can't add it.

  • xreenberg on 10/09/2019 - 08:33
    +1

    You can claim the interest at the moment, the rest of it forms cost base.

    See Steele's case:
    http://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.…

    This is about to change shortly, but for 2019, FY it should hold.

  • [Deactivated] on 10/09/2019 - 08:34

    You can only capitalise on the cost base. Stamp duty is capitalised.

  • alz on 10/09/2019 - 13:37

    Fk it! Claim it and see what happens

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