No need for an accountant?

[sashatheman]

Hello fellow property enthusiasts

I have a question. My wife and I found our first investment property a few weeks ago and are in the process of purchasing it. We have already exchanged contracts at the beginning of June. However date of settlement is the 7th of July, which means its in the next financial year.

We have incurred some expenses relating to this property already such as pest and building inspection, and will probably incur some more before the end of this financial year such as the solicitors fees, building insurance etc.

My question is the following. Since we don't settle until July can I just wait till next financial year (2012-2013) to include all those IP related expenses for my tax return?
Since we currently don't have any other investments or other complex items to add to the tax return, can I just do the paper work myself and save the money for next year?

Thanks in advance.

 

[HotRod]

Hello fellow property enthusiasts

I have a question. My wife and I found our first investment property a few weeks ago and are in the process of purchasing it. We have already exchanged contracts at the beginning of June. However date of settlement is the 7th of July, which means its in the next financial year.

We have incurred some expenses relating to this property already such as pest and building inspection, and will probably incur some more before the end of this financial year such as the solicitors fees, building insurance etc.

My question is the following. Since we don't settle until July can I just wait till next financial year (2012-2013) to include all those IP related expenses for my tax return?
Since we currently don't have any other investments or other complex items to add to the tax return, can I just do the paper work myself and save the money for next year?

Thanks in advance.

Those costs incurred at purchase look like they should be used to reduce the cost base of the property for CGT at sale, so no immediate deduction.

Look up the ATO site for Rental Properties NAT 1729–6.2011. That should help.

 

[NedKelly]

Erm, I think you mean increase the cost base.

 

[HotRod]

Erm, I think you mean increase the cost base.

You spotted my mistake.

 

[DaveM]

If you have any borrowing costs this FY (eg loan application fees) you can claim them in this FY. But most of the time they arent charged till settlement.

 

[jrc]

Building insurance would be deductible. If you have incurred a deductible expense this financial year it needs to be claimed this financial year

 

[kiwipaul]

My understanding is that the date of exchange is when the tax office considers you the owner of the property NOT the completion date. But this should not affect anything just something for you to be aware of.

When you sell the property try and exchange after 1 July that way you don't pay CGT on the gain for a full 12 months and then some.

 

[INXS]

Hello fellow property enthusiasts

I have a question. My wife and I found our first investment property a few weeks ago and are in the process of purchasing it. We have already exchanged contracts at the beginning of June. However date of settlement is the 7th of July, which means its in the next financial year.

Hopefully, you contacted your accountant to determine the best ownership structure for the property, especially as it is your first investment property. This alone can save you many thousands of dollars.