can i claim interest

Discussion in 'Accounting & Tax' started by Elives, 1st Jul, 2021.

Join Australia's most dynamic and respected property investment community
  1. Elives

    Elives Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    979
    Location:
    Queensland
    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,
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,665
    Location:
    Australia wide
    potentially could
     
    Elives likes this.
  3. Paul@PAS

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

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    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: