Private ruling: Rental property expenses - lease expenses
Published: January 2012
Ruling period: Year ending 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim a deduction for stamp duty incurred in acquiring a leasehold property which will be used for income producing purposes? | A1: Yes. | Q2: Does the deduction need to be amortised over the life of the lease? | A2: No.

Relevant facts and circumstances: You purchased a leasehold interest in a property during the 2010-11 financial year. The lease is for a fixed period. You have since rented the property to a third party tenant. In purchasing the leasehold you incurred stamp duty expenses on the lease.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 25-20.

Reasons for decision: Summary: Subsection 25-20(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a deduction is allowable for the costs of preparing, registering or stamping a lease of a property where the property is used solely for the purpose of producing assessable income. Although the term 'lease' is not defined in the ITAA 1997, the general law requirement is that a lease must be granted for a definite period. A crown lease with a fixed term is a 'lease' for the purposes of section 25-20 of the ITAA 1997. As the property is to be used for income producing purposes you are entitled to a deduction for the stamp duty costs incurred with regard to acquiring the crown lease. Section 25-20 of the ITAA 1997 does not contain any provision which states that the lease expenses need to be amortised over the life of the lease.

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