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Julien_Bride(I'm new)I'm new
25 July 2024

Hi I just bought my first investment property and while there is a lot of useful information on your website it is still unclear to me what is to include in the purchase cost.


For instance, as part of our transaction we had to pay,to the seller, part of the council rate and body corporate fees, the seller already paid for, past settlement.


So, because it was paid in the purchase process are these costs to be included in the purchase price to be used in the future against CGT or do we include them as deduction for this year as council rates and bd fees are deductible?


Thank you for your help in this matter.


Kind regards,

Julien

4,333 views
3 replies
4,333 views
3 replies

Most helpful response

Most helpful reply

ZebN(Champion)Champion
25 July 2024

Hi Julien. I provided a more detailed answer that has been sent for moderation/approval.


The council rates & I guess the body corporate fees you paid are for your ownership period (because council rates are paid for future council services rather than for past council services).


As long as your intention is to rent your new property asap (rather than use the property for a private purpose), these costs are deductible against your rental income rather than form part of your CGT cost base.


An ATO internet booklet called Rental properties 2023 literally says this on page 8.

All replies

ZebN(Champion)Champion
25 July 2024

Hi Julien. An ATO booklet says:


Expenses prior to property being genuinely available for rent

You can claim expenditure such as interest on loans, local council, water and sewerage rates, land taxes and emergency services levies you incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example, if you decide to use the property for private purposes.


Page 8 https://iorder.com.au/publication/Download.aspx?ProdID=1729-6.2023

Most helpful reply

ZebN(Champion)Champion
25 July 2024

Hi Julien. I provided a more detailed answer that has been sent for moderation/approval.


The council rates & I guess the body corporate fees you paid are for your ownership period (because council rates are paid for future council services rather than for past council services).


As long as your intention is to rent your new property asap (rather than use the property for a private purpose), these costs are deductible against your rental income rather than form part of your CGT cost base.


An ATO internet booklet called Rental properties 2023 literally says this on page 8.

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What is included in the purchase cost of an investment property | ATO Community