Is conveyancing fee when purchasing IP in the ACT deductible as expense?

Hi all,

As far as I understand it the ACT is a little different to other states as the land is leasehold. The stamp duty in the ACT therefore is deductible as expense, whereas this may not be the case in other states.

What I'm unsure about is the conveyancing fee (and title searches, etc.) associated with the purchase of the land. Is this also deductible as expense immediately? Is this counted as "lease document expenses" and therefore deductible as per ATO's article? Rental properties 2017

Thanks,
B

 

I think this answers the question Selling a rental property?

 

Not really... It seems that that link does not consider the special case of the ACT. For example, it states that stamp duty on transfer is a capital expense. In the ACT however stamp duty can be claimed as immediate expense deduction.

 

I dont think stamp duty being deductible is really relevant here. Legal costs are still still a cost base and aren't tied to stamp duty at all.

Check with a local accountant or similar, though.

 

Thanks guys.

The ATO states that "the costs of preparing and registering a lease and the cost of stamp duty on a lease are deductible..", and that "this includes any such costs associated with an assignment or surrender of a lease".

I guess it comes down to whether legal costs can be counted as such types of cost...

 

They screw us with land tax though

Agree with DT above - conveyancing is a separate matter from paying duty so I don't think conveyancing costs would be treated any differently in Canberra compared to other states (I could be wrong though).

Cheers

Jamie

 

All the answers above are assuming land is being purchased.
You cannot purchase land in the ACT, what you purchase is an assignment of leasehold.

Seek professional tax advice.

 

I'm going to push my accountant to consider this... on that note- any property-savvy accountants in Canberra?

 

The duty - Deductible on ACT property (planned use as an IP)

The wording on the legals a different matter. If a solicitor charges and bills for costs relating to assignment of a lease its also deductible in ACT. But if its a conveyance fee it is a capital cost. The search fees etc are capital costs. Wording on invoice may taint the issue.

Most accountants have no idea about this issue so expect an accountant who argues.

 

So the wording on the solicitors invoice "legal costs" (good) vs "conveyancing costs" (bad) might be make or break for how the accountant may view this

 

It could be a conveyance of a lease.