Hi all, quick question with regards to whether expenses incurred prior to purchasing a property (ie incurred whilst searching for one to buy) such as airfares, car rental etc is claimable? I thought these expenses were either claimable or would form part of the asset’s cost base. However our accountant now tells me these expenses do not fall into any category and “fall through the cracks”. This surprises me, as I seem to remember Dolf de Roos and a few others saying you can travel places and as long as you purchase a property there you can claim all or at least part of these costs. Is Dolf wrong or is my accountant wrong? Note I did not have property in the area in question prior to travelling there and purchasing, so I cannot claim it as part of “inspecting” property I already own.
If you don’t stretch your limits, you’ll set them.
My understanding is that the cost to find the property are NOT claimable. Visits back to inspect the property you own can be partially or fully claimable providing that is the sole purpose of travel.
A.
To add to Anubis, I believe that costs incurred prior to purchase are captial costs and are reduce the “sale price” for CG purposes when you sell.
If you can substantiate that you are in the business of property investing, then these costs should be claimable. You would have to already own a few properties tho.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Eigenturn,
Your accountant is right travel costs before you purchase a property slip through the cracks as the legislation is very specific about what costs add to your CGT cost base and travel costs are not one of them.
Many have tried to be considered in the business of rental properties withou success. You at least need to have 3 rental properties and management them yourself.Julia
Remember that Dolf is based predominantly in America now, and he’s not up to the letter of our tax law. So with all these seminar guys, take what they say with a grain of salt, and always check it out with your advisers before you rush off and do it.
Cheers
MelMy understanding is that you can claim one (1) trip per year to your IP. Not sure if that means you can claim 3 trips if you have three IP in another area though.
James
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