Can I choose to pay stamp duty this financial year or next financial year?

[luckyone]

Hello,

As some of you may have read, I have recently exchanged on two IP's. Both of them will not be settling until after the end of the financial year. In ACT, I have the option of paying stamp duty this financial year or next as I please. The question I have, is if I choose to pay it this financial year, will it be tax deductible as I currently have no investment properties?

Thanks for your help.

 

[pickle pickle]

No. Stamp Duty is a capital expenditure and thus can not be deducatble. The only time stamp duty is a deducatable expense is if one is trading in properties and it's only deductable once the property is sold.

 

[jrc]

Dear Pickle Pickle

Whilst your comments on stamp duty in relation to purchasing freehold are correct in Victoria, in the ACT the stamp duty is on transfer of a lease so that if the property is going to be leased out then the duty is a deduction.

The issue luckyone has is if settlement does not ocur before 30 June and teh stamp duty is paid before 30 june will the stamp duty be deductible.

 

[rugrat]

as far as I am aware, yes you can claim it this financial year. This is what I am planning on doing, with luck I will even get my tax return before settlement.

However we are seeking further clarification on this before we proceed because we have heard mixed opinions on the matter. DH rang the ATO and the response was "we think so..." or something like that.

 

[luckyone]

Thanks for your input guys. I'll have a chat with my accountant (once I find a new one) to check it all out for sure.

 

[rugrat]

Let us know what they say

 

[Carlyle81]

Per the ATO Rental Properties Guide 2009 pg 11;

For example, freehold title cannot be obtained for properties
in the Australian Capital Territory (ACT) – they are commonly
acquired under a 99-year crown lease. Therefore, stamp duty,
preparation and registration costs you incur on the lease of
an ACT property are deductible to the extent that you use the
property as a rental property.

So in short if paid before 30 June & property is used to produce income then ok.

 

[rugrat]

Per the ATO Rental Properties Guide 2009 pg 11;

For example, freehold title cannot be obtained for properties
in the Australian Capital Territory (ACT) – they are commonly
acquired under a 99-year crown lease. Therefore, stamp duty,
preparation and registration costs you incur on the lease of
an ACT property are deductible to the extent that you use the
property as a rental property.

So in short if paid before 30 June & property is used to produce income then ok.

Yes, but the question arises if the property is used to produce an income only after july 1st, whilst the stamp duty is paid prior June 30th. Some people will claim 'yes' it is deductible within that year, others will claim that you have to carry it forward into the next year. Personally I believe it is deductible in the year it is incurred.

DH tried to get in touch with the ATO about it again today, but there was a 40min wait on the phone line - they must be busy...

 

[rugrat]

Just thought I would let you know that my accountant confirmed today that it was fine to claim the stamp duty this financial year even though there is no income until next financial year.

 

[luckyone]

Thanks so much for asking for me rugrat! By the way, who do you use as your accountant, and are you happy with them?

 

[rugrat]

Callaghans in Belconnen. seem alright so far, they have experience dealing with property investment (actually steered DH and I away from shares at this point in time and recommended property, which was lucky as that was where we were headed anyway ).

 

[luckyone]

Cool, thanks for that rugrat! Will check them out.

 

[jsjtech]

Interest on Stamp Duty

What about Interest on stamp duty though? In Victoria Stamp duty is capital expense, however if you have borrowed funds for stamp duty, is the yearly interest a deduction?

Thanks

 

[dallee]

Just thought I would let you know that my accountant confirmed today that it was fine to claim the stamp duty this financial year even though there is no income until next financial year.

Thanks, I was wondering about that very question today so that's useful to know ... although the chance of finding a property that I think is a fair price ... before 30 June ... after two years of looking ... is pretty slim!