Tax Deductability

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From: David Lutan


Hi Team - a hypothetical,
Suppose I was going to buy an investment property and was at the stage of obtaining an independent valuation and building inspection. Let us say that the building inspection fails (that is I am unhappy with some aspect which I cannot reach satisfactory resolution with the seller!) and as a result I decide not to proceed with the purchase. I have incurred costs from the inspection and valuation and perhaps other related costs in setting this property for an investment, but of course I did not proceed with the purchase. Are these costs legitimate ATO deductions at this point? If, at a later stage, I was to purchase an alternative property, are all my costs in setting up "the investment" deductible - that the costs incurred against the property not proceeded with and the costs against the property purchased?

Best Regards
Dave L
 
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Reply: 1
From: Dale Gatherum-Goss


Hi David

Technically, the costs are capital in nature and so create a capital loss that you either offset against any existing capital gain, or, carry forward until such time as you do have a capital gain.

However, if you have an investment vehicle such as a trust then the costs might be part and parcel of running an investment business and thus they would be tax deductible.

I hope that this helps

Dale
 
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Reply: 1.1
From: Ethan Smith


Hi Dale,

So would that mean that when you get the inspection reports done, you should have them make out the receipt in the name of the trust in order for it to be tax deductible for the trust?

Ethan
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Ethan

yes, that is right.

have fun

Dale
 
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Reply: 1.1.2
From: David Lutan


Thanks Dale and Ethan, your contribution clears up my thoughts.

Cheers
Dave
 
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Reply: 1.1.2.1
From: Thorpey !


G'day Dale,
This happened to us with our last purchase too. Inspections and costs on properties NOT purchased incurred, in pursuit of a suitable property.
So,in our case (no trust or company), do we hold these expenses for offsetting future capital gains ?

having heaps of fun.........
Cheers,
John Thorpe
 
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