B&P Claimable - even though contract crashes?

[Icarus]

Good morning all,

Just a quick question for all of the brilliant accounting minds out there.

I had a contract on an IP crash recently (bank vals came in 11% below contract price - vendor wouldn't re-negotiate) and wanted to know whether the building and pest inspections I had done on the property would still be deductable?

It's been playing on the back of my mind recently and just thought I'd ask.
Thanks in advance!

 

[alexlee]

No, because there's no income side.

 

[Icarus]

Didn't think so, but thought I'd check to see if there was a way around it.

Thanks for the reply Alex.

 

[sunshine]

My take is that this is a cost of business/research and would be claimable if entity has other property income, especially a Trust.

I am no accountant (and definately don't want to argue with Alex) but would seek professional clarification when lodging tax return.

Sunshine

 

[alexlee]

As sunshine says, if you are in the business of buying property, then there is a chance you might be able to deduct it. However, if you are considered to be in the business of buying property, you might lose the CG discount.

 

[Icarus]

Thanks Sunshine and Alex, I think the best option would be to ask my accountant by the sounds of things. We've got a few IP's but not sure if that would be classed as being in the business of buying property! I'll post up here when I have a reply from them.
Thanks again!

 

[rugrat]

Sorry going to hijack this thread...

What if I pay stamp duty (tax deductible in ACT) this financial year and have some interest on the LOC used for a deposit and purchasing costs. But the property I am purchasing doesn't settle until next financial year - It will be an IP, but I obviously cann't earn an income from it until it is completed and settled.

 

[sunshine]

Rugrat, I believe that you can carry those losses over to the next financial year and claim all together. We have done that before, but you should check with your accountant.

Sunshine

 

[rugrat]

Can it be claimed this financial year though? Or does it have to be claimed against rental income as opposed to job income? In which case it would be claimed next financial year?

Because if it can (which is what I thought), I am looking forward to a nice fat return (which might just come in handy right before settlement).

Sorry utterly confused myself now. Might ring the ATO and double check.