C A L C U L AT I N G C L A I M S
CAN PROPERTY INVESTORS CLAIM STAMP DUTY? BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
Stamp duty is one of the largest expenses involved in purchasing an investment property, so it’s unsurprising that investors often ask if it’s tax deductible. Stamp duty is a form of tax that state and territory governments charge for certain documents and transactions, including the sale of a property.
can reduce the capital gains
The amount paid in stamp duty
tax (CGT) liability when you sell
positively affects the CGT formula
the property later on. The
by increasing the cost base value.
exemption is when an investment
As a property investor, stamp duty
property is acquired in a territory
can work favourably for you in the
under a crown lease. An example
long term. When you decide to sell
of this is Canberra where stamp
your investment property, stamp
duty is immediately tax deductible
duty forms a part of the cost base
for investors.
and can reduce the amount of
Though for typical investment
CGT payable.
property transactions, capital costs
It’s important to understand
like stamp duty are included in your
how your investment
cost base and can only be used to
circumstances, capital costs
offset CGT. CGT is a tax you pay on
and depreciation claims impact
the profit made from the sale of a
CGT liabilities to help best guide
Each state and territory have
property. Several factors come into
your investment strategy.
different stamp duty calculation
play when paying CGT on the sale
methods so the amount of stamp
of your investment property such
duty charged for a property sold
as discounts, depreciation
in Victoria may be different for
and exemptions.
a similarly priced property in New South Wales. The timeframe of when stamp duty is payable also varies. Unfortunately, property investors can’t claim a tax deduction for stamp duty immediately, though it
The basic formula for calculating CGT is:
ABOUT THE CONTRIBUTOR
(Selling price – transaction
Article provided by BMT Tax Depreciation. Bradley
costs) – (original purchase price
Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief
+ associated transaction costs) =
Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit
capital gain (or loss)
www.bmtqs.com.au for an Australia-wide service.
C21 MARKET PULSE
06
CENTURY 21
