All Topics / Legal & Accounting / Purchased property with the intention of eventual PPOR…now IP

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  • Profile photo of EzEz
    Member
    @ez
    Join Date: 2010
    Post Count: 26
    May 14, 2011 - 4:24 am

    I was wondering if someone could give me advice. We purchased a property with the intention to do a knock down rebuild immediately for PPOR on completion (we have an existing PPOR which we would have sold). This property has never been tennanted. We are thinking of now holding of on the knock down rebuild and leasing it out for a while. Could someone advsie if we would be able to claim (i.e. for tax purposes) any costs associated with the initial purchase? Thanks

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    May 14, 2011 - 7:03 am

    You cannot claim costs such as stamp duty etc until you sell, but you could claim borrowing costs over 5 years as well as depreciation and all the usual costs – but only from the date the place is available for rent.

    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

    Profile photo of EzEz
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    @ez
    Join Date: 2010
    Post Count: 26
    May 14, 2011 - 7:46 am

    Thanks Terryw. So, would stamp duty be claimable if the property was in the ACT? Even if it's purpose was originally not as an IP?

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213
    May 14, 2011 - 7:52 am
    Ez wrote:
    Thanks Terryw. So, would stamp duty be claimable if the property was in the ACT? Even if it's purpose was originally not as an IP?

    I would think that if the property's first use was as an investment it should be ok, but not sure what happens if you live in it first.

    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

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    May 14, 2011 - 9:10 am

    Hi EZ

    Yep, it should be. If you’ve never lived in it than I can’t see why not. Great timing as well – end of financial year is just around the corner :)

    Also, look into getting a depreciation schedule prepared. I know you were thinking about knocking the place down (so may think it’s not worth it) but you’d be surprised at how much you can claim (even on older properties).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of EzEz
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    @ez
    Join Date: 2010
    Post Count: 26
    May 14, 2011 - 9:17 am

    Thanks so much TerryW and Jamie….your comments are very appreciated :-).

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