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Income on land lease deductible?

Discussion in 'Accounting & Tax' started by JohnPropChat, 26th Nov, 2015.

  1. JohnPropChat

    JohnPropChat Well-Known Member

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    If a block of land with no house is producing income (storage, car park, whatever) then can it be negative geared? Say, if its leased for a car park then does it have to be considered (tax wise) any different to residential land?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you are getting market rate rent on it then the interest would generally be deductible.
     
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  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    There would need to be an expected stream of commercial income not just occasional income (ie agistment). So lets say you own the land opposite a football field and rent it on game days as parking and that's every second weekend and tat makes a decent income stream. Sure.

    Your issue will be obtaining a DA that gives it that commercial enterprise. And if you later change use and start a dev you can expect to have prior year deductions up for review if audited.

    And watch for sale of the land. GST territory.
     
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  4. Scott No Mates

    Scott No Mates Well-Known Member

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    I have previously leasedvacant land for storage on a 12 month lease & also a garage (only structure on the land) for similar uses.
     
  5. Rob G

    Rob G Well-Known Member

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    Negatively gearing a vacant block of land that happens to be partially or casually used for earning some income.

    The Commissioner is entitled to look at all surrounding facts and might determine that the non-commercial arrangement has a dual purpose including a private one. Or merely to make a long term capital gain while defraying holding costs with a few deductions from casual or incidental use.

    I would suspect that deductions may be scaled back to those directly related to earning income.

    e.g. costs directly related to maintaining the storage facility, public liability insurance, etc.

    Only partial deduction of rates and mortgage interest on some proportion if the entire block is not a warehouse or directly related to the function.
     
    Last edited: 27th Nov, 2015
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