Failed Sale campaign cost and deductibility in future

Seems harsh if all the marketing fees, staging etc. can't be added to the cost base when I do eventually sell even if I take it off the market for now. Is there a time frame the ATO looks at or can I justify the campaign has gone for over a year

Also is interest incurred during marketing/campaign and between contract date and settlement able to be added to the cost base of IP?

 

Time doesn change the character of expenses.

Interest would be a cost base expense even if property not income producimg

 

The second element of the cost base of a CGT asset relates to the incidental costs that you incur in acquiring the asset, or which relate to a CGT event that happens in relation to the asset. Costs of the type incurred by you (that is, advertising, sales contract, building inspection report and pest inspection report) are considered to fall under this element.

For CGT events that happen on or after 1 July 2005, there are nine categories of incidental costs. Relevantly, the first category includes remuneration for the services of a surveyor, valuer, auctioneer, broker, agent, consultant or legal adviser. The fourth category lists costs of advertising or marketing to find a seller or buyer.

It is considered that expenses you incurred for advertising and for the preparation of the required reports for the first sale attempt year fall within the second element. However, as a sale did not occur, these expenses are not linked to the disposal of the property and do not, therefore, 'relate to a CGT event that happened in relation to the asset' as required by subsection 110-25(3) of the Income Tax Assessment Act 1997 (ITAA 1997). They relate instead to an earlier attempt to sell the property which did not lead to a CGT event happening.

Therefore, the expenditure incurred in the year when you first put the house on the market does not form part of the CGT cost base of the property for the purposes of working out the capital gain or loss that arose from the ultimate disposal of the property.