Can I claim deduction for loan interest on vacant land during construction?

Discussion in 'Accounting & Tax' started by property_geek, 10th Aug, 2016.

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  1. pichoo

    pichoo Member

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    Deductions for vacant land

    If I were to buy a vacant land and construct a house as an IP to be rented out. The interest loan for the land is not deductible. However the construction loan interest is tax deductible. Is this correct?
     
    pichoo, 30th Mar, 2020
    #21
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    no
     
    Terry_w, 30th Mar, 2020
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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Since 1 July 2019 loan interest incurred must meet the requirement that the property has BEEN constructed and has a occupany cert and is also available for rent. Then the interest nd other prop deductions commence.
     
    Paul@PAS, 30th Mar, 2020
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  4. pichoo

    pichoo Member

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    So does it mean the cost below also can't be included in the cost of purchasing the asset (capital)?
    • ongoing borrowing costs, including interest payments on money borrowed for the acquisition of land
    • land taxes
    • council rates
    • maintenance costs.
    How about land stamp duty, loan fee, legal cost?
     
    pichoo, 30th Mar, 2020
    #24
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Any non-deductible costs(except travel etc) will add to the costbase used to calculate either profit on sale or the CGT costbase
     
    Paul@PAS, 30th Mar, 2020
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    all costs.

    Duty, legals etc was never deductible.
     
    Terry_w, 30th Mar, 2020
    #26
  7. pichoo

    pichoo Member

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    Got it, will confirm with my tax accountant. Thanks so much Terry and Paul.
     
    pichoo, 30th Mar, 2020
    #27
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