Hi wpggtom
I agree with you about the ATO website; there is a lot of info on there. There are three categories of rental expense- those which you:
- cannot claim a deduction
- can claim an immediate deduction in the income year which you incur the expense
- can claim a deduction over a number of income years
For the tax deductible expenses when building an IP, refer to p9 of
Rental Properties 2007 from the ATO... It lists them all. For anything you spend in relation to the property, keep documentation/ receipts for. Some things such as stamp duty (on the property) are not deductible but can be added to the cost base to reduce your CGT payable when you sell. Note stamp duty on the loan is deductible, so it does get complex.
If you take out a loan to purchase land to build a rental property, the interest on the loan is deductable from the time you took the loan out. However, if your intention changes, you cannot claim the interest after your intention changes.
I would also like to know when the CGT discount kicks in for building - does the 12 months start from the purchase of the land, the signing of the builder's contract???
The 12 months starts from the time you owned the property (purchased the land). It is found on p25 of the
Guide to CGT 2007 (2.39MB) where it states:
"if you owned the property for at least 12 months (even if you did not construct the new building or improvements more than 12 months before the CGT event happened) you can use the discount method to work out your capital gain from the property."
Note I am not an accountant, so you should get your own independant advice
Steve
