Private ruling: Deductions - sale of property
Date of advice: 14 November 2025
Published: 5 January 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Should the loss on your sale of the Property be treated as a general deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Although you made a loss, you purchased the Property with the intention of making a profit through resale and this intention was not abandoned. Therefore, the loss from the sale of the Property, which is an isolated transaction, is deductible under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: You purchased the Property with the intention to restore, renovate and sell it at a profit. The Property is situated in a heritage conservation zone, which prolonged the process of obtaining the required development approval. You were aware of the complexities of the work required and factored these requirements and likely timeframes into your overall development plan from the outset. You engaged building contractor, X, but procured and oversaw several aspects of the project yourself. X proved to be financially and operationally incompetent. X ultimately invoiced you an amount far exceeding both original and revised budgets. Upon raising concerns about the substantial cost overruns and delays, X abandoned the jobsite entirely. You engaged another building contractor as a replacement. After construction works were completed, you listed the Property for sale. The Property was professionally marketed as a high-end architectural residence, with the campaign emphasising its visionary design, meticulous craftsmanship, and luxury finishes. The Property was sold on DDMMXX. The Property was never used as a main residence nor rented out.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1