blocks of Land

What are the negatives in buying a block of Land in a residential area?
I know im still up for Rates, water bill too I think ?
I think also having it mowed every 2 months will be costly.
No income either.
Just holding it for Capital Gain.

 

My main negative would be no cash coming in. Even a studio apartment would get some income in your account.

 

- Having rubbish/junk dumped on your block that you have to remove at your cost.
- Squatters.

It's not.

 

Having to pay for mowing every 2 months, definitely.

 

Also keep an eye on the fence-line. There is some weird law that says if the fence is in the wrong place for 2 years it becomes the new boundary. Wouldn't want the neighbours to shift the fence over a bit and pinch some of your land...

 

Hmm, we had some neighbours in QLD who were getting the fence moved a small way off their property.
I was only renting at the time, so didn't care too much.

 

@Azazel always let your property manager know so they can alert the landlord of such things

 

You can't claim deductions until it gets sold or is rented - the longer that you hold it, the less these deductions are worth (in the future).

 

Agree...If it is no income producing.. Costs aren't deductible.

 

Technically it doesn't have to be "rented" but demonstrated as being "available for rent" . Available for rent is generally considered to be "actively advertising for a tenant".

Expenses you can claim | Australian Taxation Office

 

I've been thinking about this recently. I've always thought that land is a big no no because there's no income stream. But it occurred to me - if the gross interest is identical to the net interest in a negatively geared property with a house on it...what's the difference? Ok sure you can add value and boost the rental income in the latter, but it's not as bad as I once thought.

Over time though, rent increases. So there's that. But it seems to me that if you had a strong stream of income then one shouldn't write it off completely.

 

If he intends to build an IP on it and rent that out then you can claim deductions when it's vacant. I believe that was the whole premise behind Steele vs ATO - the intent to rent.

Of course just holding for CG and no intention to build then no deductions until selling.

 

It's a bit more difficult to lease raw land which doesn't have a DA. Once the owner or tenant has received planning consent for a particular use, possibly also gone to the expense of erecting a fence then you could take it that the owner is serious about getting the land leased. Land without approval to carry on an activity (even storage of builders plant) cannot be utilised - unless it is a conforming use for the zoning.

 

Can Moshe mow it? Extra cash for him to feed the pokies

 

@Scott No Mates you are correct it is harder to lease empty land, though some people do seem to do it. eg leasing it as space that someone can erect advertising signage, or leasing it for someone to store animals or a vegie garden on. But normally folks would cop it on the chin that nothing is deductible, wait till a house is on it and the moment it's being advertised for rent, start claiming.

Of course precedents of intent may come into it as mentioned by @Westminster

 

Nah, none of my business.
I wouldn't want a tenant bothering me with such trivialities

 

I know a few German backpackers who migh be interested

 

Backpackers are into a different type of grass.

 

Dumping rubbish on your block, this does happen I know this one.

Another negative is if you buy land and there is too much land in the area, this may impact on growth.

 

Lawn waste is not too bad.
It's the big heavy stuff that is difficult.