By Varun Agarwal, co-founder of PropRetire · Published · Updated · 2 min read
Your settlement statement for an investment property, line by line
The settlement statement for an investment property is the page that shows what changed hands on settlement day. Your conveyancer or solicitor prepares it.
Here is each line in turn, beside the part of the cost base it may relate to. How each line is treated for tax is a question for your accountant.
What does the price line show?
The contract price, less the deposit already paid, gives the balance due on the day. The deposit is still part of what was paid.
The price is the first of the cost base's five parts. That is section 110-25 of the Income Tax Assessment Act 1997.
What do the fees and duty show?
Stamp duty, the conveyancer's or solicitor's fees, and the fees to register the transfer. Some appear on the statement, and some on their own invoices.
Registering your lender's mortgage is a cost of the loan: on a rental, a borrowing expense.
The second part of the cost base is the costs of buying and selling, such as stamp duty and legal fees. That is section 110-35.
What do the rates and strata adjustments show?
The seller may have paid council rates, water or strata levies for a period past settlement. A buyer's statement adds the buyer's share of those days to what is due, and a seller's shows it as a credit.
Whether an adjustment belongs in the cost base or somewhere else is a question for your accountant. The statement shows the amount and the days it covers.
What are the other parts of the cost base?
The costs of owning it, such as loan interest, rates, land tax and insurance, for a property acquired after 20 August 1991. Then capital spending to increase or keep its value, and spending to establish, preserve or defend the title.
A cost the owner has deducted or can deduct stays out. So a rental's cost base often holds less than every bill paid.
How long is it kept?
From the purchase until 5 years after it is certain no further capital gains tax event can make it relevant, which for a sale is normally 5 years after it. That is section 121-25.
So a statement from the day you buy can need keeping for decades.
Where do the figures go?
PropRetire's Keep, rent or sell page takes the loan payouts, the selling costs and the estimated tax off a property's value today, and shows the cash left. Nothing is sold or saved.
It works from the price and costs you record, and says what it assumes until they are in.
See it for your own rentals
Thinking of selling? The loan, the costs and the tax, worked through.