Tax deductible expenses or not?

[The Chancer]

Just been going over my personal expenses for the last tax year for my tax return and have most sorted for my accountant who I see in a few weeks but I have a list of misc kind of overhead costs which I have incurred during the year while growing my portfolio.

I wouldn't normally have incurred the majority of these if I wasn't investing in property so just want some opinions if I can claim any of these as expenses or not on my return, and if I can is there a more tax effective way of paying these expenses in the future as all I have paid with after tax dollars from my salary, I would suspect most investors regularly incur a lot of these overhead type expenses each year so just curious as to the best way to set up going forward to pay these.

I've put them below with approx costs if it helps:

1. Real estate investar fees - had about 6 months of fees while searching for initial investments around $1,000

2. Flight and accommodation and car hire expenses for trip interstate for the sole purpose of viewing properties and making offers however made a number of offers but all got rejected - total cost circa $1500

3.Separate trip interstate to attend property seminar and meet with buyers agent to discuss my first purchase (ended up using this agent for first property) cost of trip $1000

4. Similar trip interstate for second purchase (different area to first) but this time an offer was accepted cost $1500

5. Various Rp data reports for due diligence before offering costs $200

6. Misc Property investment mags some hard copies some downloaded from itunes approx $250

7. Credit reports from Veda etc $60

8. PO box fees all my invoices and statements sent here cost $100

9. Misc Software ie PIA, excel etc only used for property and investments $400

10. misc spreadsheet templates for tracking investments etc $25

11. Mics accountant consultantation fees regarding structuring and planning of portfolio $200

12. Books both hard copies and kindle books to do with investments and property investments $100

13. Credit card annual fee - use this to pay personal expenses and also large amount of property costs $150 (just the annual fee no interest as paid off monthly)

14. Misc seminars etc property related small fees like $20-$40 a time

15. Buyers agent fees (think this may only be deductible when I sell not sure) $4,000


Thanks in advance.

 

[Paul@PFI]

Not a small list. Looking for cheap advice or quality ???... Have you read the ATO guide to rental properties 2014 ?? Or sought personal advice.

Hope this demonstrates what "free" questions are worth...

1. Real estate investar fees - had about 6 months of fees while searching for initial investments around $1,000

Spelling $30. Preliminary costs not deductible.

2. Flight and accommodation and car hire expenses for trip interstate for the sole purpose of viewing properties and making offers however made a number of offers but all got rejected - total cost circa $1500

Non-deductible. Never. Ever. At all.

3.Separate trip interstate to attend property seminar and meet with buyers agent to discuss my first purchase (ended up using this agent for first property) cost of trip $1000

Non-deductible - At all. Ever. Never. No.

4. Similar trip interstate for second purchase (different area to first) but this time an offer was accepted cost $1500

non-deductible. See above.

5. Various Rp data reports for due diligence before offering costs $200

Non-deductible

6. Misc Property investment mags some hard copies some downloaded from itunes approx $250

Private expenses. Non-deductible. Same as porn\

7. Credit reports from Veda etc $60 Non-deductible. Your credit issues arent loan costs.


8. PO box fees all my invoices and statements sent here cost $100

Private. Non-deductible.(Was this for the porn ??)

9. Misc Software ie PIA, excel etc only used for property and investments $400

Unsure when this was incurred. Before you bought ? Non-deductible. If its for management of actual propeties after you acquired it is your one successful deduction. Congrats.

10. misc spreadsheet templates for tracking investments etc $25

Probably non-deductible. As if you paid $25 for Ms Excel. And its 100% use. FAIL

11. Mics accountant consultantation fees regarding structuring and planning of portfolio $200

I suspect this cost was for advice before purchase and its non-deductible.

12. Books both hard copies and kindle books to do with investments and property investments $100

This is getting monotonous. Is this the porn ??

13. Credit card annual fee - use this to pay personal expenses and also large amount of property costs $150 (just the annual fee no interest as paid off monthly)

Assuming card was applied for before the property and you didnt use 100% for property I would assume this isnt deductible. At all.

14. Misc seminars etc property related small fees like $20-$40 a time

Likely spruikers. Non-deductible maybe ??.

15. Buyers agent fees (think this may only be deductible when I sell not sure) $4,000

NEVER deductible. Maybe capital. Maybe.....

Internet costs to use SS...NON-DEDUCTIBLE.

 

[Terry_w]

I would say none deductible except for

8
9 possibly
10
11 ? depending on when
12 if purchased after owing property
13 ? partial
14 ? maybe if after owning property

 

[The Chancer]

Thanks for the input and fast response Paul and Terry much appreciated.

Sorry for the long list was scraping the barrel with the left over expenses I had

What do you mean I can't deduct porn Paul so very disappointed

Most of the expenses incurred in items 9 - 13 were incurred after my first purchase and are ongoing costs going forward so looks like I have a chance of a deduction with these which is good.

Regarding items 1-4 is there any way these could be deductible at any stage in the future I.e by changing structuring to a company or trust on future purchases etc ? Just as these are pretty much the biggest non deductible expenses related to my investments that I wouldn't incur if I wasn't investing . I thought I had read somewhere (probably in the back of one of those porno mags ) that some people had claimed them as they were a 'business expense/cost of doing business' or is that only if say my full time job was as a property investor and that was my sole source of income? Or are they just never deductible at all?

Many thanks

 

[k88k]

12 - bought investment books to assist me in determining how to improve my property to generate a higher return/loss. The book was bought both prior and after i purchase my IP.

Sorry, how is that non deductible?

 

[Terry_w]

12 - bought investment books to assist me in determining how to improve my property to generate a higher return/loss. The book was bought both prior and after i purchase my IP.

Sorry, how is that non deductible?

I would say it is if purchased after owing the property - depending on the book tho.

 

[SamL]

On some of these, if you incur the cost personally in the act of acquiring property for trust (whereby that trust primary reason for existence is property investment) would any of them be claimable? I.e is it like you are incurring a 'work' expense as you are doing those things for the 'business' or is my thinking totally off the mark?

If it was a property development company all the travel and dd would definitely be out of pre-tax monies?

 

[Terry_w]

entity wouldnt really change anything.

 

[SamL]

entity wouldnt really change anything.

Are you able to explain this a bit more Terry? I would have thought if you were working for a property development company (even if that was your own company) you would be able to claim expenses incurred in undertaking work for that business, is that not correct? I.e in the case of flying interstate to inspect various properties?

 

[Terry_w]

Are you able to explain this a bit more Terry? I would have thought if you were working for a property development company (even if that was your own company) you would be able to claim expenses incurred in undertaking work for that business, is that not correct? I.e in the case of flying interstate to inspect various properties?

If you were employed by a company, even if you owned all the shares, then you may be able to claim costs associated with this employment.

But are you employed by the company?

 

[Paul@PFI]

Are you able to explain this a bit more Terry? I would have thought if you were working for a property development company (even if that was your own company) you would be able to claim expenses incurred in undertaking work for that business, is that not correct? I.e in the case of flying interstate to inspect various properties?

This isn't always the case.

Do you earn dividends ?? Then NONE of the costs are deductible as divs are a passive form of income. Some of those costs may be deductible to the company and not incurred personally too...Some may be deductible to the employee under FBT exemptions.

There is a huge difference between a company and a business....A company can own property and not be a business !! Property ownership is often NOT a business. There needs to be significant frequency and volume. A company owning a IP is no different to a human owner - The costs incurred preliminary to acquisition are NOT deductible and don't add to the cost base. The entity doesn't change the tax rules. A business of property development may also need to utilise the trading stock basis of income and expense recognition which may defer some expenses until the land is sold.

Personal advice time.

 

[Neptune]

So are you saying an annual subscription for a property investment magazine is not tax deductible? I recently claimed it and asked my accountant if it was tax deductible and he said it was....now I'm wondering