Rental Property Advise

shuangchao

It has come to my attention that some people have been advised by their accountant/tax agent that they can deduct rental property stamp duty over a period of five years. This is INCORRECT! If the accountant/tax agent indeed advised them this, then him/her is confusing stamp duty on purchase with borrowing cost.

Stamp duty on purchase should be capitalised, in another word, it forms as part of cost price of the property. it is NOT a deductible expense.

ATO keeps a close watch on rental property deduction, hence, please keep this in mind, do the right thing, seek a second opinion if necessary.

The following is a quick exercise to see how much you will saving by claiming stamp duty incorrectly:

let's say the stamp duty on an average house is $20000, incorrectly claimed over 5 years, means $4000 a year, roughly $1200 tax saving on average (depend on personal tax bracket of course), so $6000 in the pocket by the end of 5 years.
then say you sold the property at the end of 5 years, giving yourself an extra capital gain of $20000 (because you claimed it over 5 years, your costs is $20000 lower than what it should be), tax on $20000 capital gain could be from $3000 - $4500 (once again depend on personal situation and tax bracket).
The example basically demonstrated that over 5 years, you probably end up only getting $1500 by doing  it WRONG. personally, i do not believe this is alot of money for the risks involved.

(please note the above figure are estimates only)

黑山老妖

我也记得stamp duty on transfer of property是要capitalise的。stamp duty on mortgage好像可以直接claim，不知道对不对。。。

Artcore

Stamp Duty on Transfer of Property forms part of capital cost.

Stamp Duty on Mortgage forms part of borrowing costs, can be claimed over 5 years.

Mortgage Stamp Duty on owner-occupied housing was abolished from 1 September 2007 in NSW, otherwise the rates are:
Amount secured ($) | Duty payable ($)
0 - 16,000 = $5
16,001 or more = $5 + 4 for every 1,000 (or part thereof) in excess of 16,000