Failed Purchase Costs



From: John Sheather

Hi Everyone
So good to find I'm not alone in this IP planet.All from the uneasy comfort of my home office.
I've just not purchased an IP. The costs in almost exchanging, are they in anyway tax deductible? I have one other IP and my wife has two.
Thanks John
P.S.Your comments and advice are great.
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Reply: 1
From: Sim' Hampel

Purchase costs for IPs are NOT tax deductible, regardless of whether the transaction was successful or not.

However, if you make a business of investing in property, then it is merely another business expense and hence is deductible.

If you do not understand this, please speak to your accountant or tax specialist who should be able to explain what are and are not allowable deductions.

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Reply: 2
From: Mike .

Hi John,

I'm not a qualified tax expert so don't act solely on my recommendation.

As far as I'm aware legal title to a property passes to you at settlement, not exchange of contracts. If you had settled and become the legal owner of the property, then the acquisition costs, which are NOT tax deductible would be added to the cost base of the asset. So the acquisition cost is regarded as capital expenditure to establish the taxpayer's title to the asset.

Have you incurred a capital loss? A taxpayer can only make a capital gain or loss if a CGT event happens to their asset. Since you never owned the asset it is unlikely you fall under the CGT event provisions.

The above comments relate to individuals and may be different if operating as a business.

Regards, Mike
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Reply: 2.1
From: John Sheather

Thanks ,my ? answered. This forum is quite a connection to information and people.wOw
And I do plan to have property as my business in the future, very good point.
Privately owned at present.
Much appreciated
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