Dual Occupancy questions

[stinadaze]

Scenario is this: IP purchased and granny flat being constructed after obtaining approval from council. both dwellings will be completely separate, i.e. own bins, meters, entrances etc.... only the drive way is common, like a battleaxe would be.

question 1 is can I claim deductions for the granny flat before it is rented out? On the ATO site it says “You cannot claim a deduction until the construction is completed.”

What is the definition of completion date? once I advertise the property as available? Or are both dwellings viewed as one and the same (house and granny flat) and seeing as the house is rented out then I can claim straight away.

also, would i get a 1 deprecation report for both dwellings or 1 each?

Would be great to hear from people who have a dual occupancy property, or if you have any experience with this scenario.

Thanks

 

[Ideo]

From a planning law perspective the properties are viewed as one and the same as you can not sell the granny flat by itself - all development rights are based on the principle dwelling on site.

In terms of completion it is probably upon receipt of the Occupation certificate.

 

[stinadaze]

well if it's of any help to anyone else, apparently if they have separate kitchens then you need to get 2 depreciation reports done.

 

[Savanna100]

I agree with Ideo, the Certificate of Occupancy may well be the trigger.

 

[stinadaze]

that would be the most logical I think. that had slipped my mid for a second.

This does mean then that i cannot claim the interest expense on the loan to construct the granny flat I assume. I can only claim the interest expense after it is tenanted

I need to chat to my accountant but I think he's on holidays already! lucky guy! obviously I am not patient enough to wait till he is back for a reply, hence the questions.....so Thanks for the replies!

 

[vaughan]

This does mean then that i cannot claim the interest expense on the loan to construct the granny flat I assume. I can only claim the interest expense after it is tenanted

I think the principle is that deductions cannot be made until it is making an income. Also there must be an intention to make a profit (at some stage).

 

[Aaron_C]

I think the principle is that deductions cannot be made until it is making an income. Also there must be an intention to make a profit (at some stage).

That is a very hard question to answer actually. Read Steele's case.

 

[stinadaze]

I think the principle is that deductions cannot be made until it is making an income. Also there must be an intention to make a profit (at some stage).

The intention is most definitely to make a profit. to rent it out asap and also increase the value of the property overall.

That is a very hard question to answer actually. Read Steele's case.

had a read but still as confused.

Can't seem to find the info i'm after on the ATO site.