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Construction expenditure that can be claimed

Last updated 3 December 2005

Construction expenditure is the actual cost of constructing the building or extension. A deduction is allowed for expenditure incurred in the construction of a building if you are an owner-builder or you contract a builder to construct the building on your land. This includes the component of your payments that represents the profit made by individual tradespeople, builders and architects.

Some costs that may be included in construction expenditure are:

  • preliminary expenses such as architects' fees, engineering fees and the cost of foundation excavations
  • payments to carpenters, bricklayers and other tradespeople for construction of the building
  • payments for the construction of retaining walls, fences and in-ground swimming pools.

Some costs that are not included in construction expenditure are:

  • the cost of the land on which the rental property is built
  • expenditure on clearing the land prior to construction
  • earthworks that are permanent, can be economically maintained and are not integral to the installation or construction of a structure
  • expenditure on landscaping.

If you purchase your property from a speculative builder, the component of your payment that represents the builder's profit margin cannot be claimed as a capital works deduction.

Some of this expenditure may form part of the cost base of the property for capital gains tax purposes. For more information, see the publication Guide to capital gains tax.