So here's the deal. I paid 10% deposit on a lot of land, and couldn't settle due to change of jobs. It was around $33,000.
Now, my question is come the time of tax return, can I make any claim stating I lost financial investment? Is this tax-returnable?
Thank you in advance for sharing your wisdom.
PS: Thanks for sharing your valuable comments and knowledge, I was able to consult with an accountant, and we're going forward with this idea. Cheers
I paid the 10% using credit card. I made it in 3 payments. I have the receipts too
wait the OP tried it again? oh dear.
I apologize for the typo. It was 10%
apologise
I have learnt my lesson sir. Not again I'll put my chips on property at the end of bubble expansion.
Can you help me with this question though?
I don't see how you can claim the lost on a property your don't own. Unless it was done thru a trust fund setup for property investment.
I'll put my chips on property at the end of bubble expansion.
Don't even do that. Seriously. I don't think you understand the concept of property investment or how the process works. From your original comment you are obviously in this predicament due to a lack of serviceability and unable to get a loan, what does this have to do with the bubble expansion?
How is the purchase related to your work (for tax reasons)?
There is a section - Net Financial Investment loss, in the Tax return form that I've seen. I was hoping this would fall in that category.
Doesn’t the property need to be provide a potential income to offset losses against?
No of course not. This is personal. Not related to work.
I put $1,000 on black at the casino and the ball landed on red. Can I claim the $1,000 on tax as being a lost financial investment?
Haha. Please dont mock my misery.
Average Joe can't claim the losses because the winning are tax free. He is also not required to declare it as income on his tax return.
Windfalls like gambling wins are not taxable unless you do it regularly and rely on the income.
Sorry, unfortunately negative gearing only saves you if you own the property. Write this off as a loss and unfortunately you'll need to move on.
what gave you the idea that paying for the deposit on credit card was a good idea?
I was expecting high cashflow from other sources, which would've produced an extremely favorable outcome. But it misfired. Now, I am kinda happy that I had to endure through this learning curve.
But your buying land.
You don't have a house and yet to build one. So there's no income until the land settles and you finished building/get tenants etc etc.
and during this time your paying >20% interest on your credit card for the initial payments, or your were planning on claim that on tax too?
I had funds available. I just paid with cards, thinking I would settle. And the credit cards were no interest for the entire period.
As a tax payer in this country, I'm kind of hoping that you don't get rewarded for your bad decisions via the issuing of a tax refund. Kind of dont want my tax money wasted on bailing people out like this.
Neither do I. I dont want to see any good man's tax money getting misused.
Besides, I am only asking this on behalf of tax money that I worked, and if there is a chance of getting myself reimbursed, I'll go for it.
Maybe try for a private ruling from ATO?
https://community.ato.gov.au/t5/Personal-tax-questions/Is-it…
Seems like you can potentially treat it as a capital loss event if it is an 'investment'. Not sure how they would confirm your original intention whether it's a PPR or investment.
This one is a tricky one. In my opinion you have mere put in a deposit. You have not actually completed the process of investing as the property was never transferred to you. Therefore, you were not able to use the investment to generate income. You deposit would be an expense deemed to have been incurred too soon in time. Same logic for which travel to work is not tax deductible, but any further travels for work purposes originating after you have reached work are deductible. Just my opinion, but that’s what you asked 😊
Probably not. Was it a commercial investment or for a property to live in/live in and sell on?
You don't get tax back for making bad financial decisions
You don't get ozBargain sympathy for doing basically the same bad thing twice in a year and not learning.
TL:DR - It does not appear that you can afford to get on the property ladder at this point in your life. Get proper financial advice.
From my limited understanding you can only claim this loss against future investment losses. You cannot claim this loss against future salary. So to take advantage of this you will have to invest again and make money to offset this loss. If there is an accountant here, please correct me.
What did your accountant say?
don't use loan sharks.
Increase your credit card limit
Nansnake - can you confirm that this is the second time this has happened to you or is this the original deposit from last year?
It is the same. Official matters concluded a couple of months back.
Read this. A ruling from the ATO is more accurate than a bunch of random opinions.
Did you mean example 15?
Assuming similar facts. Yes.
Fits the mould of most when it comes to losing a deposit
This sounds really poorly thought out…
You should have seeked even a broker's advice before going ahead with this idea.
With a HECs Debt and huge Credit Card debts, I can't see how any bank would have given you the loan needed to pay for the property in the first place…
That being said, I'd probably take this as an expensive lesson as it'll just slow your future investments.
If you ever plan on putting a 10% deposit for a third time, just send me a pm for my bank details. I'll even be nice and give you 10% of it back. You'll be better off.
What tax are you talking about. There is no income tax paid on the purchase of land. No income, so no tax would be paid.
Now if you paid stamp duty thats a different "tax". Are you talking about that?
If so you need to change post, to a refund on stamp duty.
Maybe then some one can advise you on this - I dont know that part.
stamp duty is only paid on transfer of land (ie. settlement) which hasn't happened.
Banks are even more unlikely to lend to you, given this and prior significant outlays for property deposits.
Luck you didn't buy a house…. cut your losses
if you were buying the land as an investment, the only possible way you can claim the lost $33k is to carry it forward as a capital loss to offset a future capital gain. you wont ever get a tax refund on this, only a reduction in tax paid on a future capital gain.
how did you pay for the land?