Private ruling: Deductions - vacant land
Date of advice: 27 February 2023
Published: 17 April 2023
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim deductions for the holding costs of vacant land due to the exceptional circumstances exemption? | A1: 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

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)