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Tax Tip 137: Claiming Stamp Duty on Properties located in the ACT (Part 2)

Discussion in 'Accounting & Tax' started by Terry_w, 21st Jun, 2016.

  1. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Claiming Stamp Duty on Properties located in the ACT (Part 2)

    See Part 1 here
    Tax Tip 136: Claiming Stamp Duty on Properties located in the ACT (Part 1)

    Some more questions to consider about claiming stamp duty on property purchases in the ACT.

    1. What happens if you buy an investment property and move into it part way through the tax year?

    This is pretty straightforward. You just apportion the duty between the 2 periods and only claim the part relating to the investment period.

    2. What if you buy an owner occupied residence and move out mid way through the year?
    As above.
    See
    PBR 1011948300688 for an example (you cannot rely on a PBR)
    RBA Content | Australian Taxation Office


    But the hairy issues are:
    3. What if you buy an investment property in 2016-2017 tax year and then move into it in 2018?
    You would have claimed the full amount in 2015-2017 already. Do you need to amend this?

    And, even more hairy:
    4. You buy an owner occupied place in 2016-2017 tax year but you move out and start renting it in 2018.
    Can you claim anything?

    The ATO seem to imply, in at least one PBR, that the apportionment should be worked out based on the “length of time the property will be held”
    PBR 1011948300688
    RBA Content | Australian Taxation Office
     
  2. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    lol!.

    Me neither now that you mention it!
     
  3. propertyjohn

    propertyjohn Member

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    Great tips as always Terry!

    My partner and I are considering upsizing our PPOR and I'm considering the best strategy to use to purchase a future PPOR. My marginal tax rate is 49%.

    Do you think it is possible to combine this with Tax Tip 102: Transfers Between Spouses and Stamp Duty in the ACT to reduce how long the property is 'held'?

    Secondly, is this an expense that is claimable in the first year, or over 5 years?
     
  4. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Not sure what you mean by reducing how long property is held?

    Not sure what you mean by 'expense' - if stamp duty then it would be deductible (if at all) in the year it is incurred.
     
  5. propertyjohn

    propertyjohn Member

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    Sorry for not being clear. Here is what I should have quoted.

    Yes stamp duty. I read that costs over $100 have to be spread over 5 years, and I didn't know if stamp duty is one of them.
     
  6. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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  7. propertyjohn

    propertyjohn Member

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    Thanks for clearing that up and for the links.

    I expect stamp duty to be around $30K, so I could save $15K ish. Paying CGT would eat into that saving, although that can be reduced by selling during a low income year and including Tax Tip 26: Claim interest on a main residence against CGT on sale. Refinancing costs will also eat into it.

    If I rent for 1 year and live for 16, then CGT is on 6.25% * 50% discount * Tax Rate = 3.15% * Tax Rate. Assuming 39.5% tax rate then 1.25%.

    All in all worth getting some professional advice.
     
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  8. S1mon

    S1mon Well-Known Member

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    thanks Terry

    I often wondered (and still do) why one wouldn't rent out there to be PPOR for x period before moving in, to make the stamp duty claimable. ps. your links dont work.

    I think BA fees are deductible too because its leasehold?
     
  9. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Yes I have wondered that myself too!

    My links work for me.

    Yes I think a BA fee could be deductible for ACT property as they are helping in relation to a lease.
     
  10. propertyjohn

    propertyjohn Member

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    The link in the first post doesn't work. Here is the new link: RBA Content
     
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  11. jay.

    jay. Active Member

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    If I claim stamp duty on an IP does that mean I can't add it to the property's cost base?
     
    Last edited: 8th May, 2017
  12. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    yes
     
  13. jay.

    jay. Active Member

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    But can I add the non-deductible portion of the stamp duty to the cost base?
     
  14. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Yes - you just cannot claim against both income and use it in the cost base calcs