admin-ajax.php

Is a building & pest inspection tax deductible?

The simple answer is NO – not in the way you’re expecting. inspection house report pest check building property

When buying an income producing investment property, the expenses associated with it’s purchase are treated differently to later repair, maintenance and ongoing management costs.

Many of the upfront costs are considered what we call a ‘capital cost’.

These include stamp duty, conveyancing costs and building and pest inpections.

You cannot claim these costs as a tax deduction in the year they were incurred.

Instead they get added to your cost base and essentially reduce your Capital Gain when (and if) you sell the property.

What if I don’t buy the property?

If you pay for a building & pest inspection on a potential purchase that does not proceed then there is no cost base to add it to which means this expense it is not claimable.

What if I run a property investment business?

Now this is a little different  – but it really depends on what you mean by a “property investment business.”

ad_rop

If you’re in the business of  purchasing long-term  investment properties then the conditions described above relate to you.

On the other hand if you are a property developer  who sells stock at the end of the project, or somebody in the business of buying, selling and trading properties then should be able to claim the upfront costs  of running your business, rather making them capital costs.

There also will be many other tax reductions you can claim.

However you will lose the 50% discount on the Capital Gains Tax when you sell a property, even if you hold it longer than 12 months.



icon-podcast-large

SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

icon-email-large

PREFER TO SUBSCRIBE VIA EMAIL?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Avatar for Property Update

About

Bryce is a property development specialist, having successfully completed many development projects for Metropole's clients. Initially working as a Project Manager at Metropole since completing his Bachelor of Project Management in 2011, Bryce now acts as a buyers agent for clients, sourcing and evaluating properties with development potential.Visit Metropole.com.au


'Is a building & pest inspection tax deductible?' have 4 comments

  1. Avatar for Property Update

    August 6, 2015 @ 4:18 pm Sam

    Is the 0.25% cooling off penalty on termination of a contract to buy a residential investment property an income tax deduction, a capital loss or neither?

    Reply

    • Avatar for Property Update

      August 6, 2015 @ 5:09 pm Michael Yardney

      I’m not an accountant but I’d say it’s a capital loss

      Reply

  2. Avatar for Property Update

    July 22, 2016 @ 7:48 pm Konash

    I would like to know building inspection done prior to purchase of the investment property is it part of purchase cost as Stampduty and solicitor Charges .

    How we treate the expenses incurred on preparing the Tax Depreciation schedule for investment property ? Is it part of the cost of the property.

    Reply

    • Avatar for Property Update

      July 22, 2016 @ 11:03 pm Michael Yardney

      A building and pest inspection is a capital cost, just like legal costs and is not deductible or depreciable

      Reply


Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*

facebook
twitter
google
0
linkedin
0
email

Michael's Daily Insights

Join Michael Yardney's inner circle of daily subscribers.

NOTE: this daily service is a different subscription to our weekly newsletter so...

REGISTER NOW

Subscribe!