Can interest,land tax, rates on vacant land be used as a tax deduction
- Thread starter INVSTOR
- Start date
If the intention is to build and later rent it as investment then potentially yes. I am not sure on costs other than interest; however either way you can and should check on the ATO website. There is a section in the specific tax rules for investment properties that outlines vacant land.
To claim expenses (on anything really) it must be earning an income.
Old house + land being rented - Yes
Vacant resi block - No
Rural land with livestock being agisted on it - Maybe
....and then there are some exceptions
Old house + land being rented - Yes
Vacant resi block - No
Rural land with livestock being agisted on it - Maybe
....and then there are some exceptions
” 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.”
This is a quote from the ATO rental properties guide.
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.”
This is a quote from the ATO rental properties guide.
Hiya
In general yes, Steele Vs ATO.............but speak to another accountant I reckon
ta
rolf
In general yes, Steele Vs ATO.............but speak to another accountant I reckon
ta
rolf
Yep, the exception being as the others have said...that they intend to build an IP on it that they intend to rent out (but you did not mention that in your first post).
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2001479/00001
Thanks, I found the Steele case. Yer I think she needs another accountant.
Thanks, I found the Steele case. Yer I think she needs another accountant.
I'm amazed at the number of accountants who do not know about this. I had a friend whose accountant was adamant that you could not claim these costs. I sent him the ruling which was then passed on to his accountant who reluctantly agreed that I was right.
To be fair to the Accountants, their legal advice is NOT DEDUCTIBLE for investors unless the taxpayer has pretty comprehensive evidence of intention AND ongoing efforts.
To merely buy with a future intention is NOT GOOD ENOUGH.
Keep documents of enquiries, council applications, builder quotes, etc.
There must be absolutely no break in the process. For instance, waiting until better finance is available breaks the process, continuing efforts must be made.
The legal opinion is that the ATO website understates this issue. An audit will likely inspect dates on all correspondence trying to spot inactivity.
Cheers,
Rob
My argument is that if a layman like myself knows the ruling, why is it that many accountants don't know about it or at least find out, instead of brushing it aside when challenged. I've learnt that it is very important to use an accountant who has some interest in property investing .
As Rob has pointed out, you need to be seen to be doing something with the property, not just sitting on it (or letting the local kids use it as a playground, which wouldnt be good if one of them got hurt and sued you!)
But I wonder if anybody has used planning rules to justify a longer period of deductibility? (i.e. longer than the 4 years in Steele)
For example, if I buy a vacant block and submit a planning request to council, but the council keep knocking back my planning requests because they don't like my vision for a new house, can I keep deducting while I resubmit plans, even if that process takes me say 5-10 years? Perhaps I might end up going to VCAT, whihc might take a few more years (The ultimate decsion maker on planning in Victoria)
Perhaps if the ATO thought I was just submitting silly plans to get them rejected then they'd reject the claim, but in overlay areas it might not be so obvious as to whether a planning application is silly or not?
In any event this is all academic, as the costs of all the appealling, etc would surely be more than the tax deduction received.
Cheers
Jonathon
But I wonder if anybody has used planning rules to justify a longer period of deductibility? (i.e. longer than the 4 years in Steele)
For example, if I buy a vacant block and submit a planning request to council, but the council keep knocking back my planning requests because they don't like my vision for a new house, can I keep deducting while I resubmit plans, even if that process takes me say 5-10 years? Perhaps I might end up going to VCAT, whihc might take a few more years (The ultimate decsion maker on planning in Victoria)
Perhaps if the ATO thought I was just submitting silly plans to get them rejected then they'd reject the claim, but in overlay areas it might not be so obvious as to whether a planning application is silly or not?
In any event this is all academic, as the costs of all the appealling, etc would surely be more than the tax deduction received.
Cheers
Jonathon
