Question relating to Allowances and Travel when searching for investment properties

Hi Guys,

I am trying to get on the right foot for this financial year, and as a result, have been looking at what is claimable in terms of Travel and Allowances with respect to investment property.

My question is.... am I allowed to claim travel and allowances (accomodation / meals, etc) for investigating / inspecting properties, even though I don't particularly have a house in the immediate area I am looking.

My accountant told me today that I would be able to claim for such expenses / allowances if I went to inspect a property in close proximity to my other investment property, as I could go and do an inspection on it while there.

The thing is, I don't want to buy in the same area.....I am looking in another part of South East Queensland.

In order for this to be claimable, what is the limiting factor.....

i.e.

Does it have to be in the same suburb??
Can it be the same city??
Is it within a certain km from the investment property??

He mentioned that it wont be claimable, but can be added on to the cost base of the property when bought. But what happens with after going up there and spending a few days running around the streets, deciding against the area? What then. If I don't buy the house, how can I claim the travel and allowances.

I could remember reading a Gutherum Goss book a couple of years ago about claiming anything and everything, and I don't think it was limited to an area around a pre existing invesment.

I do have a company and trust for the property portfolio, so I would have thought wherever I go searching for property, it should be covered.

Clarification is needed please.:confused:

Thanks in advance.

Cheers,

F
 
If your rules are similar to ours, it's all about "what is reasonable".

I asked a very similar question of our Tax Preparer.
I wanted to know when we move to Australia, can we claim our annual flight back to Canada to manage, do repairs and maintenace our properties.
She said no, that it can only be by car.
I was not happy with that answer, because I "knew" it can't be that narrow of a rule.
I called our Canada Revenue, and asked the same questions.
I started off with asking if we had a IP a couple of provinces away, and a flight is cheaper than by car.Yes, that would ok, but it not be Motor Vehicle expenses, it would be under Travel Expenses. We wouldn't be able to claim meals or lodging as this is considered personal.I took it a step further and said we were moving Overseas and needed to return annually.
Since we have family here, she said we should claim a portion of the flight as personal.I figured 20 % personal is reasonable , as we only went back to visit Rob's family once in 6 years.
I asked if I could have this in writing, she said Canada Revenue would charge for that, but I could submit my taxes, then have them adjusted with the flights afterwards. I said I would submit them with my taxes and object if they are disqualified.(I had looked on the internet, and found a very similar ruling )

So my response to you would be to keep a diary of all your expenses.
Make appointments that can be verified. Have a REA sign a pre-made form of the dates and time you viewed listings.Go for inexpensive lodging and meals, as this will most likely be disallowed.The worst that can happen, is you will need to pay back the amount of the taxes you saved.
 
The limiting factor is that in Australia you cannot claim any expenses to go looking.

http://www.somersoft.com/forums/showthread.php?t=55422

Very blunt and to the point Prop.....makes it clear. Thanks.

twobobsworth,

Yeah, valid point also

Kathryn,

Seems reasonable. I have a property in London, and have already gone through the questions with my accountant regarding wether a trip to London would be claimable.

I am glad to say it is,:) and expenses with regards to airflights, accomodation and food is able to be deducted. You can't go overboard, but I was planning to go over a couple of months ago to change property managers (as they are pretty pathetic), while there, inspect my property, and also try and purchase another one in the area. Was all good to go until I found out BTL mortgages were through the roof. (Even though I believe property is pretty cheap (well discounted anyway), the repayment on mortgage and initial 40% deposit was something I couldn't really be burdoned by at the moment.

If from Nova Scotia, (as per your location) I hoped you missed the hurricane that wiped out a bit of that area recently. I was travelling through Canada last month (other side...the Rockies) when they had all the terrible weather on the eastern side.....We don't get too many of those in Aus, so you should like it here. :)

Cheers

F
 
My question is.... am I allowed to claim travel and allowances (accomodation / meals, etc) for investigating / inspecting properties, even though I don't particularly have a house in the immediate area I am looking.

Not even included in cost base !

ATO ID 2003/771 , withdrawn now because it is in their standard property guide.

Cheers,

Rob
 
I take on everything said so far, but..........

After having a think about all this, I came up with the following example.

As I am in the construction industry, I cannot claim travel expenses from my home to my place of work. However, from my work (office), I can claim travel expenses if I then head out to site to carry out a site inspection. Thats fine.

Since I operate a company for my investment properties, how about if I drove down to one of my properties and inspected it, and then from there went to inspect another propertya few hours away???

I know I might be trying to get blood out of a stone, but as both situations are businesses, and both are income producing (one alot more so than the other unfortunatley at this stage...:)) does this make sense (justification).

I am ready to get shot down here, but thought it might be a valid point??

Thanks in advance,

F
 
Fudge, you have come up with the only possible scenario that I was thinking of too.

If you were an employee of a company that did property investment and the position called for you to do inspections on lots of properties, make offers, hire contractors for renos etc etc., then the company might pay you a wage for doing so. And the costs incurred - travel, meals, accom, might be a deductible expense in the hands of the company (not you).
 
Since I operate a company for my investment properties, how about if I drove down to one of my properties and inspected it, and then from there went to inspect another propertya few hours away???

F

A corporate trustee holding "your" investments is not a "business".

Whoever is claiming the deductions will need to apportion the travel expense on the mixed purpose journey.

If the travel to a prospective purchase inspection is the dominant purpose, then nothing may be deducted if the side-trip to your existing IP is merely minor and incidental.

After all, an employee cannot deduct the cost of commuting to work merely because they collect the office mail on the way.

Cheers,

Rob
 
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