Hi all,
I just want to make sure that I've done my tax correctly because at the end of the last financial year, I purchased a block of land to build a house on and rent out so for Investment purposes.
I paid all bank fees and over $30,000 in deposit prior to June 30 and all interest charges up to that date. I know that if it is not income producing then there isn't a lot that can be done but I just wanted to make sure. Can anything be claimed given it is intended to be a rental property or do I have to wait until it is built and income is coming in before I can make any claims at all? Can those things be claimed next year when it is income producing perhaps?
Thanks
donkey33 wrote:Hi all,
I just want to make sure that I've done my tax correctly because at the end of the last financial year, I purchased a block of land to build a house on and rent out so for Investment purposes.
I paid all bank fees and over $30,000 in deposit prior to June 30 and all interest charges up to that date. I know that if it is not income producing then there isn't a lot that can be done but I just wanted to make sure. Can anything be claimed given it is intended to be a rental property or do I have to wait until it is built and income is coming in before I can make any claims at all? Can those things be claimed next year when it is income producing perhaps?
Thanks
My view is the interest is deductible from day one because your intention has always been to build the house in return for rental income (ie, the purpose behind the borrowing has always been of an income producing nature), pursuant to the Steele's Case. This is so even if there is no rental income derived in that year.
This contrasts the scenario where someone has a house but it is not available for rent; in which case, the interest is only deductible when the house becomes available for rent.
Be careful with borrowing costs (eg, bank fees in setting up the loan, etc). They are usually deductible over the term of the loan or 5 years, whichever is shorter (unless the particular cost is less than $100, which is immediately deductible). In other words, you can't claim those costs all at once.
Eddie
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