Land Only, no income - Negative gearing ?

[abcdiamond]

Quick question..

If someone owns land, for investment purposes, but has no income from it, are all the costs rolled up to reduce the eventual Capital Gain, or can they be offset annually against other income, in the same way as Property with a rental income ?

Thanks

 

[Rixter]

It is my understanding that there is No tax deduction on holding expenses associated with vacant land by it self, as it is not income producing like you mentioned.

 

[alexlee]

I thought interest on investment land (i.e. you're not planning to use it as your PPOR) is capitalised and eventually reduces your CGT because it increases your cost base?
Alex

 

[Dazz]

Quick question..

If someone owns land, for investment purposes, but has no income from it, are all the costs offset annually against other income, in the same way as Property with a rental income ?

Thanks

I believe it all comes down to the word "intent", and the actions that support your 'intention' for the Land.

If you intend to build something on it that will eventually produce taxable income, then yes the income is tax deductible for the vacant block of land whilst you "get your act together". This could take years of course, but as long as there is a clear trail of actions on the owner's part that they are headed in the right direction.

I believe it's Steele vs ATO in the High Court that the precedent was set.


Not advice, just what I read on these boards a while back by far more knowledgeable and qualified folk.

 

[oc1]

I believe it all comes down to the word "intent", and the actions that support your 'intention' for the Land.

If you intend to build something on it that will eventually produce taxable income, then yes the income is tax deductible for the vacant block of land whilst you "get your act together". This could take years of course, but as long as there is a clear trail of actions on the owner's part that they are headed in the right direction.

I believe it's Steele vs ATO in the High Court that the precedent was set.


Not advice, just what I read on these boards a while back by far more knowledgeable and qualified folk.

Daz

Spot on

Cheers

Oscar

 

[Simon]

There is some suggestion that if your intention is to develop an incoming producing asset on the land then the interest is deductible.

Your accountant should have all the details.

 

[Rixter]

Reading abc's post I took it as just being a buy & hold then sell later unimproved. abc what were you planning to do?

 

[abcdiamond]

Reading abc's post I took it as just being a buy & hold then sell later unimproved. abc what were you planning to do?

It's for a friend who bought some land a few years ago, as an investment, and he has asked if he can claim the interest.
From what I gather, he will be selling it unimproved, and I feel that my first comment that "the costs will be rolled up to reduce the eventual Capital Gain" would be right, but am reluctant to say anything until I can confirm it.

The tax agent, that he gets to do his PAYE tax return, does not give him confidence for something other than a basic wages tax return, so he turned to me to try to locate the correct info


Following Dazzling's post, I'll have to discuss that "intention" aspect with him

 

[regrow]

Hi

I have in the past bought a block of land with the intent to build on it but due to lifes uncertanties we sold it. All interest was deductable whilst holding the block.

But as always check with your accountant first.

Regards

Regrow

 

[coopranos]

if your friend has had it for a few years it is very doubtful that argument would fly if it was ever questioned.
The intent to earn an income cannot be at some remote point in the future.