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Re: Claiming on Interest deductions incurred prior to property available for rental.

Newbie

Views 81

Replies 7

Can we claim Interest deductions incurred prior to property available for rental i.e. while it is in the construction phase to get negative gearing? The intention to keep it as an investment property has never changed. The timeline of the property- purchased land in late 2017, titled and finished construction on May 19. Thanks

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 6

Hi @Kavitha11

 

You won't be able to claim the costs as a deduction while the property is not genuinely available for rent.

 

You, instead, will include these interest costs in the cost base of the property. This reduces the property's capital proceeds when you dispose of it.

 

You can read about this on rental expenses to claim and calculating the cost base for real estate on our website.

7 REPLIES 7

Most helpful response

ATO Community Support

Replies 6

Hi @Kavitha11

 

You won't be able to claim the costs as a deduction while the property is not genuinely available for rent.

 

You, instead, will include these interest costs in the cost base of the property. This reduces the property's capital proceeds when you dispose of it.

 

You can read about this on rental expenses to claim and calculating the cost base for real estate on our website.

Newbie

Replies 5

Thanks for your reply.

 

But as per Rental Properties guide 2019, Page 9 says as below

"Expenses prior to the 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 on land you have purchased to build a rental property or 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

 

Can you please clarify on this? 

 

 

ATO Community Support

Replies 4

Hi @Kavitha11,

 

You are looking at an old publication, the legislation changed from 1 July 2019. There is a Rental property guide for 2020 (pg 3, 7-8) which advises you cannot claim on vacant land or a property that is being constructed.

 

We have also provided information on your other post, please view the entire thread here.

 

Please use the links for further assistance.

 

All the best.

Newbie

Replies 3

Hi there

 

Just read through the link you provided for 2020 publication, it actually has the same paragraph on page 9 as 2019 doc that says you can claim the expense prior to genuinely available for rent?(1 page after you referred location). I then search the 2021 publication and it also has the same paragraph! Is this a mistake that has not be rectified?

ATO Community Support

Replies 2

Hi @Can-I-ask,

 

Appreciate your feedback. You can check the example of Kylie, this explains a property being built. Once it can be advertised for rent or is rented out, you can claim deductions.

 

We will look into the other. 

 

All the best

Newbie

Replies 1

Thanks Jodie for the link it is very helpful!

 

cheers 

ATO Community Support

Replies 0

Hi @Can-I-ask,

 

You're welcome, glad you found it useful.

 

I have sent feedback through on your other query, thank you for bringing it to our attention.

 

Have a great weekend. Smiley Happy