Building Insurance purchased in financial year

Hi,

Was hoping to get some clarification.... I am due to settle on a property next month (July), house will be available for rent from the 7th of July. I purchased building insurance for the property in June.

How does the deductabiliy of the insurance work when the cost was incurred in a different financial year? Is it done on a proportion basis or do I need to cancel this policy and renew it again next financial year?

Thanks in advance

 

The cost should be deferred to the time when it is available to rent. 2017. The ATO has a private ruling on their register that if the property is currently tenanted and you buy it with tenants then you can claim in in 2016.

 

Thanks @Paul@PFI - so does that mean that even though I have already paid for it in 2016 I can just simply claim it in 2017? It doesnt have to be purchased in the financial year it is available for rent?

 

The policy is incurred for a twelve month period of time. Look at borrowing expenses...They may be paid this year and deferred for as much as 60 months. Prepaid expesnes spanning 13mths + must be apportioned to each tax period. The interst example in Steele's case allows a deduction BEFORE income is available.

 

Thanks Paul. I appreciate the info.