Hi All, if i buy a run down property which due to the state of it can't be rented out and have it sit vacant for 7-8 months whilst waitng for da and then build 3 townhouses on the land can i claim the interest on the loan whilst it's vacant? it'll be in personal name and it's in Victoria. Cheers,
I dont believe any holding costs can be deducted. 1. s8-1 "necessarily incurred in producing assesable income" is not met. Not deductible under general principles. However principles of Steele's decision would have applied prior to 1 July 2019 if the property being constructed was to be retained and rented....But for.... 2. Vacant land holding period rules look deeper into what a"structure" is and exclude some existing structures. That said if the proposal is to demo its then vacant land anyway as the existing structure is not permanent. And will be demo'd anyway leaving vacant land. The land is treated as if it is vacant land. I have had a number of people approach me after initial bad tax advice that suggested you can buy a block with a house ready for demo and it allows interest to be claimed and no GST on the sale. That isnt the case. What is vacant land? Land will be considered vacant during the period the entity held the land if: it did not contain a substantial and permanent structure it contains a substantial and permanent structure and the structure is a residential premises which was constructed or substantially renovated while the entity held the land and the premises are either not yet lawfully able to be occupied lawfully able to be occupied but not yet rented or made available for rent.