Property Investment Courses

[coastymike]

A few clients have done some property investment courses and the promoters have been telling them that the fees are 100% deductible.

Would like to refer people to ID 2003/324 http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2003324/00001

Had a client who owns NO investment properties being told the course was tax deductible. Interesting that ID 2003/324 states "This expenditure does not have the essential character of expenditure incurred in gaining or producing assessable income. Accordingly, as this expenditure is not incurred in gaining or producing assessable income no deduction is allowable under subsection 8-1(1) of the ITAA 1997"

In other cases apportionment of the course fee may be necessary.

Beware people giving tax advice who are not registered tax agents.

 

[Terry_w]

I agree.

Even if a person had existing properties it is likely the % claimable would be small as most of such courses would be concentrating on the acquistiion of future properties.

The proportion of the cost of the seminar that relates to this primary purpose is incurred at a point too soon to be incidental and relevant to the taxpayer's income earning activities from any future investment properties ( FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541). There is insufficient connection between this expense and the earning of rental income from current investment properties.

The proportion of the cost of the seminar that relates to this primary purpose is incurred at a point too soon to be incidental and relevant to the taxpayer's income earning activities from any future investment properties (Federal Commissioner of Taxation v. Maddalena 71 ATC 4161; (1971) 2 ATR 541). There is insufficient connection between this expense and the earning of rental income from current investment properties.

 

[Paul@PFI]

Mike - Are you suggesting that someone in the property sales industry is lying ??

My bull dust detector goes off for those seminars where some "rich woman / man/ property millionaire" shares their property secrets.. How they made millions and own 10, 20 properties and usually only in the last few years. Funny about that. Truth is few of them own that much. They have a syndicate and are just the top of the pyramid (scheme). Secret is this - They want to sell you an overpriced property so you can make them even more wealthy. If I found a sure fire way to make millions I would shut up and keep it quiet. Most of them gold coast based and do the spruiker circuit. Of course now its using a SMSF that is their solution.

I wish I had $1 from every client who wants to claim the costs of buying an IP too. They spend a king ransom on flights, accom etc and then find out that NONE is deductible or even a cost-base adjustment. Ditto recent case of client who spent a motza on building inspections for IPs at auction. He still hasnt purchased. Unfortunately its just down the drain.