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Originally posted by agent007
Is the interest of a loan on land tax deductible, If the land is bought to build an IP?. If yes, for how long it can be deductible before building the IP?
Thanks, James
Ebbie said:"What we didn't realise at the time was that prior to "practical completion" of the house, our costs would not be claimable off our income - it was only claimable off capital gains on any eventual sale of the property." They discovered this after contracts were signed, in a conversation with their accountant.
This surprised me because I thought the interest would have been deductible as it is when you buy vacant land with the intention of building an investment property. Is it a different story with house-and-land packages? (or should they get a new accountant?)
Sorry Mry my mistake, I've just re-read the article and they were only talking about the INTEREST costs. If I'd included the previous paragraph the whole quote should have been:Mry said:For some reason, there are people in the world who feel mortally wounded that they cannot claim all the costs of building a house for rental as they build it as a full tax deduction.
That's what I thought. Thanks for pointing out the mistake in the article with practical completion.Mry said:As decided by a recent case, you can claim interest on land that you intend to build a rental property on. However, other costs (ie not interest) in building a property are not deductible, as mentioned, and form part of the capital base of the property once completed.
Good point notts, I have also claimed council/water rates and land tax etc on vacant land.notts said:Hi Guys
I have also claimed expenses other than interest on vacant land ( such as council rates , water rates , borrowing costs etc ) for the period from land settlement date onwards.
The investors in the article might just do that if they are members of this forum!Mry said:Ah interest. Hmm, someone should go over to that accountant and whack him with a rolled up copy of TR2004/4 to his right, and a copy of the judgment of Steele's case to the left until he reneges.
pgfrassati said:Hello,
Completely tax ignorant...
My hubby had a rental property which has been rented for over 8 years. he demolished last year the house and rebuilt it meaning to put it for rent but then decided to sell it. He sold it just last week. Meanwhile during these months when it was being constructed, He is been paying interest.
1) is he able to claim these interests as a deduction.
2) or s/d he add them to the cost base when for CGT calculations?
Sorry Mry my mistake, I've just re-read the article and they were only talking about the INTEREST costs. If I'd included the previous paragraph the whole quote should have been:
"Over that time they would be paying interest that they wouldn't be able to claim on their income.
"What we didn't realise at the time was that prior to "practical completion" of the house, our costs would not be claimable off our income - it was only claimable off capital gains on any eventual sale of the property."
They discovered this after contracts were signed, in a conversation with their accountant."
That's what I thought. Thanks for pointing out the mistake in the article with practical completion.
Ebbie.