Deductibility of pre-development cost (architect/plannings fees etc.)

Looking to start the next journey, and I am wondering if the cost associated with architect/planning fees for a proposed residential development are tax deductible. What happens if the actual development doesn't proceed? Are these fees still tax deductible?

Many thanks for reading and helping!

 

Are you in the business of development?

 

Thanks Terry. No, I have a full-time job and this is just something I am intending to do as a side project.

 

It will all depend on the situation. If you will be taxed on capital account these expenses will not be deductible, but if tax as income then they could be. This could the case for one off transactions or isolated transactions.

You need specific tax advice

 

The costs are likely to be preliminary to any development venture but will assist to reduce profit at a future date IF the development proceeds to reality. For an isolated profit making venture it is too early to be considered deductible. The non-commercial loss rules would also impact in any event. Assuming the venture progresses then the cost likely forms a element of the cost of the construction and would be capitalised to offset future sale proceeds. Or add to the CGT costbase maybe. Maybe. And the GST element of the expense may at some point even be creditable. Maybe.

Would also depend who incurred the expense. Asset protection and structuring should have already considered structure and be incorporated into the matter. eg If you plan to use a company to do the dev and sell them off then the company hasnt incurred ay cost perhaps ?