A bonus tax deduction when you invest in the ACT

When purchasing property in most States and Territories, the costs of acquisition and disposal are not tax deductible. These costs include the purchase price, fees to an agent representing you, conveyancer fees and stamp duty on the title transfer.

However, one of the benefits of these costs is that they can be used to reduce the capital gains tax payable when you eventually sell the property.

When you purchase a property in our nation’s capital, the Australian Capital Territory, the stamp duty on the transfer of a property is tax deductible in the first year. This means that the total cost can be used to reduce the amount of tax payable.

Slow-pokes, please take note! This can only be claimed in the financial year that the property was purchased so you’ll need to work with your accountant ASAP to claim this at the end of the financial year.

Leasehold System

Keep in mind that properties in the ACT are transferred under the ACT’s leasehold system.

Leasehold is a system of land tenure. You buy the right to use land under a lease for a term of 99 years. In every practical way, though, when you purchase or build a property, you own it, just as you would anywhere else in Australia.

We tend to agree with local barrister Chris Erskine S.C. who has said that ”It’s not immediately clear why we need Crown leases anymore and there has been discussion about this in the last 20 years but I suppose the most that you can say is that its inertia, it’s the way things are and if it ain’t broke don’t fix it.”

More can be found on the leasehold system here.

We remind all of our purchasers that their tax situation is unique and they will require further advice from their tax accountant.

Conclusion

The unique nature of the leasehold system in the ACT offers some special financial benefits come tax time. One of the significant benefits is claiming stamp duty on the transfer of a property.

Joshua Boctorani

Joshua Boctorani

Managing Director joshua@assetbase.com.au

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