Tax deduction

[scott]

Ok bare with me its, complicated:

I have bought my first IP and have a few $k unspent from the bank loan.

I want to add up all sundary expenses in locating, travelling and generally obtaining this IP (I looked and researched for 3 months).

Say this comes to $500 (which I can document with receipts and diary).

Question 1 Can this be a straight out tax deductable expense?

Question 2 Can I say that some of the left over money from the bank loan was used to pay for these expenses and thus the interest on the $500 be tax deductable (as I am negatively gearing)

Question 3 I paid $600 as a 'holding cooling off deposit' on another potential IP early in my search and lost it due to misrepresentation by the agent (that's another story). Can this be a straight out tax deductuion and/or added to the $500 in question 2 and claim the interest on the total of $1100

Thanks Scott

 

[Lotana]

Scott,

Good questions. I'll try to save time to our tax experts and answer some of them.
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Q1. I want to add up all sundary expenses in locating, travelling and generally obtaining this IP (I looked and researched for 3 months). Can this be a straight out tax deductable expense?
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This is deductible only if you are in the business of property trading, otherwise it is added to the cost base for SGT purposes.
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Q2. Can I say that some of the left over money from the bank loan was used to pay for these expenses and thus the interest on the $500 be tax deductible (as I am negatively gearing).
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You can reimburse yourself for these expenses from the loan within a short timeframe to be able to claim interest deduction. Make sure your documentation is complete.
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Question 3 I paid $600 as a 'holding cooling off deposit' on another potential IP early in my search and lost it due to misrepresentation by the agent (that's another story). Can this be a straight out tax deduction and/or added to the $500 in question 2 and claim the interest on the total of $1100
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The lost deposit would only be deductible if you are in the business of property trading. Otherwise I'm afraid it is not.

Say cheese

Lotana

 

[DaleGG]

Originally posted by scott
Ok bare with me its, complicated:

I have bought my first IP and have a few $k unspent from the bank loan.

I want to add up all sundary expenses in locating, travelling and generally obtaining this IP (I looked and researched for 3 months).

Say this comes to $500 (which I can document with receipts and diary).

Question 1 Can this be a straight out tax deductable expense?

Question 2 Can I say that some of the left over money from the bank loan was used to pay for these expenses and thus the interest on the $500 be tax deductable (as I am negatively gearing)

Question 3 I paid $600 as a 'holding cooling off deposit' on another potential IP early in my search and lost it due to misrepresentation by the agent (that's another story). Can this be a straight out tax deductuion and/or added to the $500 in question 2 and claim the interest on the total of $1100

Thanks Scott

HI

As Lotana stated, no you cannot get a tax deduction for these things unless you are in a business of buying property. Or, you buy property though a trust and the costs are paid for by the trust.

The loan money can be used and yes the interest on the loan will be tax deductible.

No, the $600 will be a Capital Loss which you can carry forward to offset against any future Capital Gains.

Have fun

Dale

 

[scott]

Thanks, That was quick

Thanks, Just to confirm that the $600 as previously described can be added to the $500 so that I can claim the interest on the $1100 (as I am negatively gearing
Scott

 

[DaleGG]

Re: Thanks, That was quick

Originally posted by scott
Thanks, Just to confirm that the $600 as previously described can be added to the $500 so that I can claim the interest on the $1100 (as I am negatively gearing
Scott

Hi, yes that is right. This is because at the time you had an intention to make an income from the deal.

Have fun

Dale