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Tax deductibility of selling costs of property that didn't sell?

Discussion in 'Accounting & Tax' started by HappyBrizzie, 5th Oct, 2015.

  1. HappyBrizzie

    HappyBrizzie New Member

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    Hi

    So I've put an investment property up for sale and incurred the costs of cleaning, property styling and sales agency. Unfortunately the offers weren't where I was expecting, and I did not proceed to sell.

    The property is now back to being leased.

    I'm wondering are the selling costs tax deductible in the case of a non-sale?

    Any guru's advise is much appreciated, so thank you in advance.

    Cheers
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not against income. Some of the costs may be used to reduce CGT when eventually sold.
     
  3. HappyBrizzie

    HappyBrizzie New Member

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    Hi Terry

    Thank you for your reply. I knew someone would know this!

    Does it matter even if the sale is a number of years later?

    Cheers.
     
  4. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    i cant see how these selling agent costs would make up any of the five elements of the cost base.

    If it earned rental income some of the costs such as cleaning etc might be deductible. if not rented then cleaning might be a third element of the cost base.

    Agents fees on a failed sale or sale that didnt proceed dont generally form part of the cost base as no CGT event has occurred at that time
     
    Last edited: 5th Oct, 2015
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Maybe the 2nd element - if they continue to try to sell?
    incidental to disposal?
     
  6. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes I agree.

    But some of the costs may be deductible, depending on what they were.
     
  8. HappyBrizzie

    HappyBrizzie New Member

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    Certainly gets technical. The property was leased for a couple of years until the lease expired. I then put it on the market for sale. The costs to do so were the selling agent's advertising cost, cleaning and styling. The styling cost the most at $5K, and is what I'm hoping could have some tax relief. As mentioned, I did not end up selling the property given the offers were much lower than expected, and I returned the property to the rental market. Interestingly one of the parties who offered to buy became the tenant.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Perhaps the styling relates to the rental income in that case - bit of a long bow though.
     
  10. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    depends on what type of styling was done. possibly capital expenditure and can be depreciated.