All Topics / Legal & Accounting / Capital cost deductions when wwitching from PPOR to investment?

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  • Profile photo of Martin DCX1EMartin DCX1E
    Member
    @martin-dcx1e
    Join Date: 2010
    Post Count: 4
    September 9, 2010 - 11:09 pm

    Hi

    I'm looking for some advice on the tax treatment for the following situation:

    I'm looking to purchase for first property, my strategy is to live there for the first 6 months, to receive the first home owner grant and stamp duty concessions, and then to switch this to a investment property.

    My questions is given that I'll be buying this as a PPOR (principal place of residence), would I still be entitled capital costs deductions (e.g. for acquisition costs such as stamp duty, legal fees and bank application fees) once the property is capitalised on the sale of the property? Or is this only applicable is you purchase the property as an investment from outset?

    Thanks in advance

    J

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 9, 2010 - 11:53 pm

    I believe so – but this may need to be apportioned over the total time. eg if you sell within 12 months and live in it 6 months of this time then it was an IP for 50% of the time you held it so you may only be able to claim 50%.

    Also borrowing costs (such as LMI and app fees etc) are not capital costs and can be claimed against income over 5 years.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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