Steele's law and current deductions

[Jamie]

Hi all,

I guess this is directed at the accountants on the forum, but advice from anyone who can help is very welcome.

For those that havent read it, Steele's case found that loan interest on vacant land is deductible if the intent is to provide rental accomodation on the block within a reasonable timetable.

My question is this: Steele was successful in backdating interest deductibility once intent had been proven - what happens if someone wants to claim it in the current financial year?

If I have a vacant block of land and am currently paying interest on it, is that interest deductible if I am making endeavours to build an income producing property on the block, even though construction might not occur for 12-18 months??

Is it enough to show the same intent to build/provide a rental property as is required in Steele's case?

If so, is the same level of proof required (architects/builders plans, council consultation etc?)

Thanks in advance to anyone who can assist.

Jamie.

 

[Mry]

What happens if someone wants to claim it in the current financial year?

They claim it in the year that the interest was incurred. They go back and amend previous returns if the interest was not claimed in that period.

If I have a vacant block of land and am currently paying interest on it, is that interest deductible if I am making endeavours to build an income producing property on the block, even though construction might not occur for 12-18 months??

It took 4 years for Steele to start building. 12-18 months isn't as long. But Steele showed obvious signs throughout of their intent to build an income producing property. As long as you can show that there are genuine causes for not building (lack of funds, approval, getting a builder) which are holding up constructing and that you show intent to build for rental purposes (perhaps asking a property agent what you could rent the place for via a letter?), you should be fine if the tax office come knocking.