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Edited version of private advice
Authorisation Number: 1052091630503
Date of advice: 27 February 2023
Ruling
Subject: Deductions - vacant land
Question
Are you entitled to claim deductions for the holding costs of vacant land due to the exceptional circumstances exemption?
Answer
Yes. Your circumstances are considered to be exceptional circumstances as per section 26-102 of the Income Tax Assessment Act 1997 (ITAA 1997). Therefore, you can deduct the expenses you incurred in holding the vacant land for a period of three years from the date of the exceptional circumstance. Further information about deductions for vacant land can be found by searching 'QC60628' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You signed for a house and land package to be used as an investment property.
The building work was completed and the property was tenanted.
A few years later major building issues related to subsidence were noted and notified to the builder.
A complaint was lodged with the relevant regulatory body when the situation deteriorated.
The regulatory body advised that demolition of the house and a rebuild was the way forward.
The tenants vacated the property.
You engaged a demolisher and the property was demolished.
Insurance provided compensation towards demolition and subsequent new build following the demolition.
Relevant legislative provisions
Income Tax Assessment Act section 26-102
Income Tax Assessment Act subsection 26-102(6)