Taxation Deductions On The Purchase Of A Property

by Peter Flemming

If you purchased residential property that was constructed later than 18/7/1985, or commercial property that was constructed after 20/7/1982, then a tax deduction for the building write off can be claimed as a tax deduction. This is currently measured at 2.5% of the construction cost.

When purchasing property, we recommend that you always inquire before purchase or settlement if the property is eligible for the write off, and that you gather the relevant details. The write off is based on "cost of construction" NOT on the purchase price.

If the "actual cost" data is not available, a quantity surveyor can provide a figure for future claims, however, you can avoid this expense if you obtain the data from the vendor who is normally more prepared to provide information before the contract than after settlement. You might even ask the real estate agent to source this information prior to inspection.

Making the claim for building write off will increase your return on investment if you rent the property, due to the increased tax deductions.

If you have any queries please contact Peter Flemming at peter.flemming@schuhgroup.com.au or Malcolm Diefenbach malcolm.diefenbach@schuhgroup.com.au