Buying properties raises many questions amongst buyers, such as “Is stamp duty deductible?” and many other tax-related questions.
Truth be told, there are several costs involved apart from the purchasing price. The stamp duty tax imposed on property ownership will always be a factor to be considered, whether as a property buyer or investor.
In this comprehensive guide, we explain everything you need to know about stamp tax deductions and address the key questions you may have.
Is stamp duty tax deductible?
Property investment has brought many tax advantages, which have helped individuals maximize their returns.
In order to make the most of these benefits, one needs to understand which expenses are tax-deductible and which ones are not.
Whereas many costs associated with investment properties can be considered tax deductions, stamp duty tax is not.
According to the ATO, stamp duty tax is considered and classified as a capital cost incurred during property acquisition. This means it’s part of the property’s cost base and cannot be deducted for tax purposes.
Can you claim stamp duty on tax?
For investors looking to own properties, there will always be that question of whether you can claim stamp duty tax or not.
Well, it depends on the context of the purchase you are making. Stamp duty reduces taxable income through some claims, but it is not deductible to residential properties meant for personal tax purposes.
Regarding investment properties, the deduction is included in the cost base for capital gains tax (CGT) as it’s not an immediate tax deduction.
Is stamp duty included in the cost base?
People always want to know whether stamp duty is included in the cost base.
Stamp duty is included in the cost base of investment property for capital gain taxes.
It helps reduce capital gain and CGT liability when a property is sold. Here’s what’s in the cost base;
- Purchase price of a property
- The stamp duty paid
- Conveyancing fees
- Any other transaction-related costs
Summary
Navigating property taxes and deductions may be challenging, but with a guide from a registered tax agent such as KSH TAX you can consider your stamp duty tax worries handled. Book us and get a free consultation!
