display home deductions

[WilliamB]

Hi gang,

We have almost finished building our first two development properties, and about to begin marketing one, and moving into second.

We were thinking of either using our place as a "display home" or furnishing the house for sale, as it is my understanding houses potentially sell better if they are furnished properly. As such, we are wondering if we can get any tax benefits for any furnishings we buy as the primary purpose will be to extract maximum value for the house, but it wouldn't hurt if we ended up with some nice new tax deductible furniture for ourselves.

This may not be allowed, but it is an interesting thought.

Anyone?

 

[marg4000]

How can it be a tax deduction?

Unless you sell it with the house, you are simply storing it there until the house is sold.

Hiring furniture may be a different story as it is a direct expense relating to the property for sale.
Marg

 

[WilliamB]

I dunno, isn't there a nexus with the spend and income, in that spending money on furnishing increases the chance and value of sale?

Sorry if you think this is a dumb or rude question, we are honest tax paying citizens, but just thought it was an interesting question.

 

[DaveM]

If you are deriving a personal benefit from it, then it wont be deductible.

 

[Scott No Mates]

As the furniture that you are buying is not being sold with the houses ie you are buying an asset but not selling them, you would be required to depreciate their cost. If you then sold the furniture on ebay, you would be able to claim the 'loss'.

 

[Paul@PFI]

You have thought about the GST issue involved ?? And the balancing adjustments to each item.

The ATO have too.

None of the items acquired are expensed. There are no extra deductions. If you keep the furnishings its akin to fraud. Detection risks is simple - If audited ATO will comparse the sale conract to the inputs and ask - "What happened to the leather lounge ?" If they find one item you have a larger problem involving every development you have done for every cent spent.

If you sell the items indpendently of the property GST still applies to the sale of each item too. But you can claim the loss. Its a revenue loss against the profit on sale of the home. You will find its a zero sum outcome.

 

[Ausprop]

when selling houses furnished in the past the items have never been listed - just furniture as inspected on x/x/x.

 

[WilliamB]

Sorry guys we are asking out of interest, fraud is not our game.

It sounds overwhelmingly like this is asking for trouble, which is not our intention, however I just thought it was an interesting one.

I thought maybe some portion of the purchase (even depn for a month or two - if it sits there that long, hopefully not) is still something.

I will follow up with my accountant, but expect to cop a whack over the nose with a newspaper.

Cheers,

 

[Ausprop]

I will follow up with my accountant, but expect to cop a whack over the nose with a newspaper.

Cheers,

not sure why, you can legitimately buy the furniture at a depreciated value

 

[WilliamB]

Thanks Ausprop. Will definitely check it out. One of my general rules is "If you don't ask, you don't get".