Can I tax deduct on an inv. prop. that earned no rent in a financial year?

[goodfun]

I bought a house in march .. but it needs some work before renting it out .. if I don't get any rent from it till the next financial year, is it still valid to deduct the interest payments I am making for march-jun from my income for this year?

My intention is to rent the place, and in this time it is unoccupied/being worked on, and I have not lived there myself at all.

Is that enough information .. thanks for all your help!

[DaleGG]

Hi

Yes, it is OK to claim the costs even though there is no income.

Dale

Originally posted by goodfun
I bought a house in march .. but it needs some work before renting it out .. if I don't get any rent from it till the next financial year, is it still valid to deduct the interest payments I am making for march-jun from my income for this year?

My intention is to rent the place, and in this time it is unoccupied/being worked on, and I have not lived there myself at all.

Is that enough information .. thanks for all your help!

[WillG]

Does the property have to be available for rent though ?

[sbe]

The property MUST be available for rent.

All other costs up to that time are considered capital in nature.

IE.
Repair something now, it's capital.

Repair something after the tenent moves in, it's a repair.

Capital must be depreciated, repairs can be claimed.

Of course, replacing a whole kitchen is usually capital regardless.

[JumJones]

Well ... backwards really ...

If you buy a house in say Bendigo, and you live in Melbourne - can you claim travel expenses from after you purchase the house for repairs etc to fixup while its unoccupied and awaiting tenants? Your _intention_ is to rent it out.

Could you claim for renting a motel room and other sundry costs as well?

j

[Richard Hunt]

goodfun,

Notwithstanding that it would appear from the time frame mentioned that the scale of the repairs/renovations would prelude you from claiming that the IP was available for rent during this period, the interest would continue to be tax deductible.

With the interest being incurred on a loan used to purchase an IP that is always intended to be rented, there is likely to be a sufficient nexus between the interest incurred and the income to be earned after June.

The law on these and similar situations continues to develop in interesting ways. Recent court cases related to the question of whether expenses (including interest on loans) incurred by a taxpayers both prior to the commencement of a business and after its cessation were tax deductible, have been particularly sympathetic to taxpayers.

Things never stay the same in this game for too long...

[sbe]

My understanding is definitely yes. You can claim traval to the property for maintenance. If it can be REASONABLY shown that you had to stay overnight, that could be claimed too.

Mind you, Bendigo isn't that far from Melb, and why couldn't you camp down in the house overnight.......

These may preclude the accomodation claims......


Cheerio.

Simon.