Tax Time is Looming again

[Ray Brown]

Hi all,

having just bought another IP, and with July just 2 Months away, I thought I might start to have a go at understanding the tax implications of my IP's.
Which of the following are allowable deductions....?
And where might I find a comprehensive and accurate list?

REGISTRATION OF TRANSFER OF LAND $102.50
REGISTRATION OF MORTGAGE $102.50
REGISTRATION OF DISCHARGE OF MORTGAGE $205.00
STAMP DUTY ON MORTGAGE $556.40

SOLICITOR PROF FEES $582.00
DUTY ON CONTRACT $3487.50
OFFICE COSTS ASSOCIATED WITH PURCHASE $49.50
TRAVEL TO INSPECT PROPERTY $35.00
AIRCOND REPLACED 5 WEEKS AFTER SETTLEMENT $419.00
PRE-PURCHASE BUILDING AND PEST INSPECTIONS $490.00
TITLE, RATES AND WATER SEARCHES $220.00
ELECTRICAL POWER SAFETY SWITCH NOT INSTALLED $???

cheers in advance

[geoffw]

Hi all,

having just bought another IP, and with July just 2 Months away, I thought I might start to have a go at understanding the tax implications of my IP's.
Which of the following are allowable deductions....?
And where might I find a comprehensive and accurate list?

REGISTRATION OF TRANSFER OF LAND $102.50
REGISTRATION OF MORTGAGE $102.50
REGISTRATION OF DISCHARGE OF MORTGAGE $205.00
STAMP DUTY ON MORTGAGE $556.40

SOLICITOR PROF FEES $582.00
DUTY ON CONTRACT $3487.50
OFFICE COSTS ASSOCIATED WITH PURCHASE $49.50
TRAVEL TO INSPECT PROPERTY $35.00
AIRCOND REPLACED 5 WEEKS AFTER SETTLEMENT $419.00
PRE-PURCHASE BUILDING AND PEST INSPECTIONS $490.00
TITLE, RATES AND WATER SEARCHES $220.00
ELECTRICAL POWER SAFETY SWITCH NOT INSTALLED $???

cheers in advanceYou can find a comprehensive list by buying Dale's "Tax Battles" manual http://www.gatherumgoss.com/shopping.htm

I think most of the above will only be offset against CGT when you sell (possibly).

But you're missing out non the potentially biggest deduction of all.

You've made no mention of the age of the property. There may well be some very good depreciation deductions. If the builinngt was build after about 1989, there's building deductions. If it has any "fairly" new carpet, curtains, fittings- there's the the possibility of getting deductions for those. They could be worth much more than the deductions you mention.

[DaleGG]

Hi

The first four items should form part of your borrowing costs (and as such they are claimed over the lesser of a five year period, or, over the life of the loan) as they relate to the loan being taken out to buy the property.

The next two are capital costs and reduce the CGT if you sell the IP in the future.

Office costs and travel are not deductible because they do not relate to the holding of the property, rather, they relate to the buying of the property and so they are incurred too early to be allowed as a tax deduction in relation to this property.

Naturally, you could review the timing and nature of the office costs to see if they could be claimed under another part of your tax return.

The A/C unit and the safety switches will be depreciated over a number of years.

The searches form part of your capital costs and will reduce the CGT when you sell, so, you cannot claim them as a tax deduction.

Cheers

Dale



Hi all,

having just bought another IP, and with July just 2 Months away, I thought I might start to have a go at understanding the tax implications of my IP's.
Which of the following are allowable deductions....?
And where might I find a comprehensive and accurate list?

REGISTRATION OF TRANSFER OF LAND $102.50
REGISTRATION OF MORTGAGE $102.50
REGISTRATION OF DISCHARGE OF MORTGAGE $205.00
STAMP DUTY ON MORTGAGE $556.40

SOLICITOR PROF FEES $582.00
DUTY ON CONTRACT $3487.50
OFFICE COSTS ASSOCIATED WITH PURCHASE $49.50
TRAVEL TO INSPECT PROPERTY $35.00
AIRCOND REPLACED 5 WEEKS AFTER SETTLEMENT $419.00
PRE-PURCHASE BUILDING AND PEST INSPECTIONS $490.00
TITLE, RATES AND WATER SEARCHES $220.00
ELECTRICAL POWER SAFETY SWITCH NOT INSTALLED $???

cheers in advance

[Corsa]

Hi All

A comprehensive list of how to deal with the tax treatment of your rental property can be found on the ATO website via the following link:

Rental Properties 2003 (http://www.ato.gov.au/individuals/content.asp?doc=/content/31610.htm&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

A guide on how to deal with depreciation can be be found via the following link:

Guide to Depreciating Assets (http://www.ato.gov.au/individuals/content.asp?doc=/content/31615.htm&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

A guide on how to deal with Capital Gains Tax issues can be found via the following link:

Guide to Capital Gains Tax (http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

A guide on how to deal with prepaide expenses can be found via the following link:

Guide to Prepaid Expenses (http://www.ato.gov.au/individuals/content.asp?doc=/content/31745.htm&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

A guide on how to deal with Capital Gains Tax for Personal Investors (including Shares) via the following link:

Guide for Personal Investors for CGT (http://www.ato.gov.au/individuals/content.asp?doc=/content/31572.htm&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

A taxation ruling on how to treat monies drawn down on a line of credit can be found at the following link:

Guide on LOC Drawings (http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR20002/NAT/ATO/00001)

A taxation ruling addressing the deductibility of repairs can be found a the following link:
Deductions for Repairs (http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9723/NAT/ATO/00001)

A taxation ruling addressing the division of net income and losses between co-owners can be found at the following link:

Dividing Net Income and Losses between co-owners (http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9332/NAT/ATO/00001)

A taxation ruling addressing how to treat a holiday home:

Treatment of a holiday home (http://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2167/NAT/ATO/00001)

Anything not covered here? Then this link will go to all the taxation rulings and publications available for dealing with Rental Properties and taxation issues at the following link:

All Taxation Rulings and Guides (http://www.ato.gov.au/individuals/content.asp?doc=/content/31610.htm&page=10&pc=001/002/042&mnu=5392&mfp=001/002&st=tt&cy=1)

Hope this is of some help, these guides can be downloaded to your PC for use during tax time.

Kind regards

Corsa

[Ray Brown]

Thanks,

11 links and several useful comments and suggestions later, the next question is:

If I can't find a specialist IP Accountant in Cairns,(not that I've begun the search for one yet) is it unusual to use one from a different city?

If so, are there any impartial forumites out there who would like to suggest one?

[Mark Laszczuk]

Yeah. Dale. Enough said.

[geoffw]

What Mark said.

Go for Dale- he knows IPs, trusts, investments.

Start by getting both his manuals (Tax Battles and Trust Magic).

Then see if he (or one of his assistants) can fit you in!