Deposit bonds for IP

Hi all

I understand that certain costs associated with purchasing/selling an IP (real estate commission, stamp duty, legal fees etc.) are not deductible but can be used to reduce the cost base when calculating CGT liability post sale.

Does anyone know if the fee associated with a deposit bond falls into the same category? I figure it should given it's a cost in acquiring an income producing asset, but just wanted to see if anyone out there knew for sure.

Thanks

 

My understanding is that the fee for a deposit bond are treated similar to acquisition costs and form part of the capital base and are not deductible for income purposes.

I am not a tax specialist so it is better to check with a competent tax accountant who deals with property investors.
Greg

 

Hi Gonz,

Yes, this should be a purchase cost that is deductible upon disposition of the property, as is mortgage insurance and buyers advocate fees in addition to the other items you've listed.

Happy to recommend a good accountant if you wish, if so please PM me.

 

Hi Gonz_7,

I didn't spot this earlier but I note that you're from Canberra, where everything is lease-hold. Stamp duty on a lease is deductible in the first year, which applies to ACT property if buying there and helps with the first tax return! This is distinct from borrowing costs, which may be claimed over the first 5 years or go into the capital base - can't recall.

Cheers, Dave