Interest TD on a block of land?

[Brettus]

Hi All
As you know the interest paid on loans to buy an investment property is tax deductable (after factoring rental income, etc). Is this principal the same with a block of land, before and during the building of a dwelling on it?
As there would be no rental income, all of the interest and other expenses should be deductible right??
Am I overlooking somethign here?
Thanks too much in advance

[yo yo ma]

Yes it is deductible IF it is your intention to build a rental property... see p10 of link

Similarly, if you take out a loan to purchase land on which to build a rental property or to finance renovations to a property you intend to rent out, the interest on the loan will be deductible from the time you took the loan out. However, if your intention changes – for example, you decide to use the property for private purposes and you no longer use it to produce rent or other income – you cannot claim the interest after your intention changes.

http://www.ato.gov.au/content/downloads/IND00133187n17290608.pdf

[Brettus]

Thanks Yo Yo Ma, that seems pretty clear cut.
If my intention was to sell that home after it was built, I assume this interest would not be deductible? If not, can you just rent it out for a short period say 6 months maximum and then sell?
Cheers

[lizzie]

you would be touching on gst territory with building and selling within 5 years.

if you build with the intention to sell (or do sell) within the 5 years periord you can be up for gst on the sale price ... because the house is then considered "trading stock" rather than "investment".

have a talk to your accountant.