A common question asked by clients!
How do I treat for tax the cost of landscaping to improve the value of a property?
Landscaping is an improvement to the property and therefore not deductible under section 8-1.
OK, what about landscaping being deductible under Div 43 capital works over 40 years?
Or if not claimable as a capital improvement under Div 43, can we add to the cost base of the investment property as improvements and no tax deduction allowed?
Costs involved in landscaping a property are generally seen to be capital in nature. Landscaping would generally amount to an improvement to the property which would have an enduring benefit.
These expenses generally need to be added to the cost base of the property for CGT purposes under s110-25 (ie, can reduce a future capital gain on sale of the property).
You would not generally be able to claim depreciation or capital works deductions in relation to the landscaping work.
What about Div 40 depreciation claim for plant and equipment?
In order to claim depreciation deductions under Division 40, it is necessary to identify specific items of plant or equipment. Landscaping expenditure relates to the construction cost directly related to landscaping, (ie) landscape designs, landfill, Lawns, garden beds, (which create artificial landscapes, etc, which are not integral to the installation of building structures, as such not normally give rise to items of plant or other depreciating assets.
Expenditure on items that could be classified as separate depreciating assets would be, for example, pumps, water tanks, sprinkler systems, fencing, retaining walls, culverts, roads, car parks, etc, which can be claimed under either Div 40 or Div 43.
Expenditure on landscaping is unfortunately specifically excluded from the capital works expenditure under Division 43. Refer to ATO ID 2006/235 which discusses this issue.
If you would like any further advice, please contact our office, or book online.
Principal Place of Residence Exemption Loss if Sold While Overseas Summary of how the Principal Place of Residence (PPR) Exemption is impacted by moving overseas. When Australian homeowners move overseas and become non-residents for tax purposes, selling their...
Having an investment property prior or posted to it being a principal place of residence has tricky CGT Calculations. Capital Gains Tax (CGT) is an essential consideration for property owners when selling a property used for different purposes over time. This blog...
Picture of a vacant block of land to illustrate it may be subject to land tax What is Land Tax? Land tax is a state and territory-imposed tax on the unimproved value of taxable land owned by individuals, companies, and trusts. It is calculated annually based on a...
What are the tax and investment considerations for a Granny Flat above versus a Tiny Home below? Income Tax Return Reporting - Income Streaming Tiny Homes Tiny home ownership does not have to follow the ownership interest of the underlying property ownership. For...
Secondary Dwelling From December 2023 the Victorian Government has passed planning changes to make it easier to build Granny Flats - or "small secondary dwellings", on existing homes. The Victorian Premier Jacinta Allan revealed that planning permits will no longer be...
The ATO is particularly targeting property investors that are not using the help of a specialist property tax accountant like Umbrella Property Accountant, due to the high error rate being discovered from ATO Audits. The ATO Audits into self-preparers have uncovered...
Gold Coast - Example of the Housing Rental Competing Forces Many Apartments are sitting empty most of the year, including an entire beachfront tower. Gold Coast mayor Tom Tate cited an entire high-rise sitting empty in the triple tower Jewel development at Surfers...
Victoria was the most locked-down state in Australia, if not the world during Covid, resulting in the Victorian Government accruing over $30 Billion in debt to keep the doors closed. Victorian Statement Government wants to raise $8.6 Billion over the next 4 years by...
Joint Venture tax understanding for property developers in Australia Joint Venture Agreement What is a (JV) for Property Development A joint venture (JV) is a cooperative agreement between two or more parties in which all parties contribute their resources (such as...
When the deceased person's home has a mixed history of being a principal home and a rental, combined with the fact the estate sells the otherwise principal home after 2 years, the CGT is not so easy to understand for the family left to deal with how and if CGT is...
