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Losing deposit on off-the-plan purchase

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Newbie

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Hi 

I hope someone could give me an idea if my thought on declaration of below loss is correct.

 

Scenario:

July 2014 - A purchased a off-the-plan investment property with 10% deposit paid to the trust account.

Aug 2014 - Agreed with vendor to release 10% deposit from trust account to interest earning account (i.e unsecured loan to vendor at interest rate of 10%) where interest could be used in the future when A settles its investment property.

Dec 2018 - Vendor went into administration process and A was been advised that 10% deposit released to the interest earning account is not recoverable nor the potential interest should be earned during the period. 

July 2019 - Lodging tax return - How should A declare the 10% deposit + interest loss from the incompleted off-the-plan investment property? CGT loss? 

 

Thank you in advance for your opinion.

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Former Community Support

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Hi @CW-QTax

 

Welcome to our community.

 

When talking financial Investments they include things like:
•Your shares  
•An interest in a managed investment scheme  
•A right or options in respect of any of your shares or interests in a managed investment scheme  
•Distributions from a partnership that included income or losses from one of these financial investments
•Interests in trusts that you provided consideration to acquire.

 

However your total net investment loss does not include your capital gains or losses.This represents a CGT Loss.

 

For further guidance you can check out the information on our Legal data base found on ato.gov.au. It speaks to the subject Property Expenses and identifies a lost deposit as a CGT event. Once you separate what is investment loss and CGT loss then you will record it at L1 and 18 Capital gains accordingly.

 

Thanks for your first query.

 

Kind Regards
MarkA

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

Hi @CW-QTax

 

Welcome to our community.

 

When talking financial Investments they include things like:
•Your shares  
•An interest in a managed investment scheme  
•A right or options in respect of any of your shares or interests in a managed investment scheme  
•Distributions from a partnership that included income or losses from one of these financial investments
•Interests in trusts that you provided consideration to acquire.

 

However your total net investment loss does not include your capital gains or losses.This represents a CGT Loss.

 

For further guidance you can check out the information on our Legal data base found on ato.gov.au. It speaks to the subject Property Expenses and identifies a lost deposit as a CGT event. Once you separate what is investment loss and CGT loss then you will record it at L1 and 18 Capital gains accordingly.

 

Thanks for your first query.

 

Kind Regards
MarkA