Depreciable vs Capital

[Donna L]

i have a feeling I asked this before but didn't get an answer. When purchasing a property which costs relate to Capital cost and which are the 5 year depreciable borrowing costs:

Particularly:

Valuations (for assessment of property or bank required)
Deposit Bond fees
Mortgage discharges
Mortgage stamp duty for loan
Fees paid for a bank guarantee

Thank you.

Is there a web site that deals with this. THe ATO has Rental Properties but this tends to deal with the annual costs but I can't see anything relating to buying and selling of rental properties.

 

[DaleGG]

Hi

Section 25-25 of the tax act and TD 93-48 summarise the rules.

Valuations arranged by a bank for lending purposes are a borrowing cost

Deposit bond costs are a capital cost to reduce CGT

Survey & registration fees are a borrowing cost

Mortgage stamp duty is a borrowing cost

The bank guarantee could be either depending upon the purpose.

I would have a look at the rules above

Dale

Originally posted by Donna L
i have a feeling I asked this before but didn't get an answer. When purchasing a property which costs relate to Capital cost and which are the 5 year depreciable borrowing costs:

Particularly:

Valuations (for assessment of property or bank required)
Deposit Bond fees
Mortgage discharges
Mortgage stamp duty for loan
Fees paid for a bank guarantee

Thank you.

Is there a web site that deals with this. THe ATO has Rental Properties but this tends to deal with the annual costs but I can't see anything relating to buying and selling of rental properties.

 

[WillG]

Hi DonnaL,

I believe the following are classed as 'borrowing costs' and are claimed over a 5 year period.

Mortgage Stamp Duty,
Mortgage Insurance,
Loan App Fee's,
Valuation Fees,
Search Fees,
Registration of Mortgage

The following are 'Purchase costs' - ACT and NT treat STamp Duty differently to other states because the land is leasehold. The Stamp Suty is classed as an expense in the first year thus can be claimed as such.

Stamp Duty,
GST,
Legal Fees,
Dispersements,
Building Inspections,
Registration of title


See RentalProperties-2002.pdf - page 10 of 24 on the ATO site

http://www.ato.gov.au/download.asp?...operties2002.pdf&Title=Rental+properties+2002

Cheers,
Will

 

[Les]

G'day all,

The way I heard it (which makes it a little easier to understand) is that Borrowing costs relate to the "arranging of finance" while the Purchase Costs directly relate to the costs associated with purchasing a property (NOT arranging a loan).

Regards,

 

[mross]

Hello,

just a quick note also to let you know that some QS's apportion the cost of purchase costs such as stamp duty and conveyancing over the depreciating assets in a building.

So, kake sure when doing your calculations that you are not double dipping.

Michael