Our Experts Answer:
With all due respect to your accountant friend, I would have to disagree and am relieved you have decided to ask for a second opinion. In order for expenses on your property to be tax deductible, the property must be available for rent. That doesn't mean you have to have someone renting the property, it just means that the property must be available to be rented. If you are living in the property or the repairs and maintenance (or renovations) you are doing to the property mean that a tenant could not rent out the property, then any revenue expenses incurred will not be tax deductible. The repairs and maintenance (or renovation) costs can be capitalised and then depreciated accordingly. In terms of now using the property as your home, I would advise that you sell the property from the LAQC to yourself at market value (as determined by a registered valuation), deal with the depreciation recovered issue within the LAQC and then depending on the status of the balance sheet, you can then prepare final accounts for the LAQC. As this will happen in the 2008 financial year, you will not be able to do this until after 31 March 2008. This situation, as it does with many others, demonstrates the need to get good advice pertinent to your situation.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.