Is the project cost related to rental property tax deductable?

Question

I bought an investment property in October 2009 and leased out in Feburary 2010. Because this rental property got a decent size backyard, it’s an ideal site for dual occupancy. Acturally, I’m applying planning permit with council. If the application is successful, I will build the back unit for rent as well to increase the rental return. I know you said previously that the interest of the loan for building a rental property is tax deductable. What about other costs like, application fees, architect charges, land survey fees etc. ? Are these cost tax deductable?

Answer

Application fees, architect charges and land survey fees are all capital costs. They increase the cost base of the property for CGT purposes so do not qualify for an outright deduction now or when the property is rented out. But they can be included in your special building write off under Division 43 so you will get to claim 2.5% of their costs per year once the property is rented out. Unlike interest , Division 43 specifically states that special building write off cannot be claimed until the asset starts producing income.

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