<p>Following the latest Mentoring sessions, tax financial advisor Anthony Wolfenden addresses the most pressing questions for the 2026 financial year. This episode provides a deep dive into the ATO’s strict &quot;vacant land&quot; rules, the nuances of the six-year primary residence exemption, and the major compliance shift coming with Payday Super in July 2026. Whether you are currently building, refinancing, or managing a mature portfolio, these technical guardrails are essential for protecting your deductions and minimizing future capital gains tax.</p><p><br></p><p><strong>What We Covered</strong></p><p>1. Holding Costs and Construction</p><p>• The Vacant Land Rule: Since 2019, you generally cannot claim interest, rates, or land tax on vacant land. Deductions only trigger once a permanent structure is lawfully occupied and available for rent.</p><p>• Cost Base Strategy: While these costs aren&#39;t deductible now, they are added to your &quot;cost base,&quot; which reduces your capital gains tax when you eventually sell.</p><p>2. Education and Mentoring Deductibility</p><p>• The Income Test: Education is only deductible if it relates to an income-earning activity you currently hold.</p><p>• Apportionment: Mentoring fees are often split—partially deductible for rental optimization and partially non-deductible for general wealth creation coaching.</p><p>3. The Record-Keeping &quot;Lifetime&quot; Rule</p><p>• Beyond 5 Years: While standard receipts require 5 years of storage, any document impacting the &quot;cost base&quot; (LMI, building contracts, settlement statements) should be kept for the entire duration of ownership plus five years after the sale.</p><p>• Digitization: Keeping a permanent digital vault for capital items is the only way to ensure you don&#39;t overpay on CGT decades down the line.</p><p>4. Capital Gains Tax and the 6-Year Rule</p><p>• The Acquisition Date: For tax purposes, the contract date—not the settlement date—is the key CGT event.</p><p>• The 6-Year Safety Net: You can rent out your primary home for up to six years without losing your CGT-free status, provided you don&#39;t claim another property as your main residence.</p><p>• The &quot;Reset&quot; Rule: If you exceed the six years, your cost base is reset to the property&#39;s market value on the day you first moved out.</p><p>5. Loan Contamination and Redraws</p><p>• Purpose Over Security: The ATO cares about where the money went, not what property secures the loan.</p><p>• The Offset Trap: Redrawing equity from an investment loan to put into a personal offset account makes that interest non-deductible and &quot;contaminates&quot; the loan structure.</p><p>6. Payday Super 2026</p><p>• The July 1st Shift: Starting July 2026, employers must pay superannuation at the same time as wages. Real-time reporting via Single Touch Payroll means the ATO will see non-compliance immediately.</p><p>7. Strata and Special Levies</p><p>• Deductible vs. Capital: Admin and sinking fund fees are usually deductible. However, &quot;Special Levies&quot; for structural improvements (like a new roof) are capital works and must be depreciated over time.</p><p><br></p><p><strong>3 Takeaways</strong></p><p>1. Document Everything Forever: Holding costs that are &quot;locked&quot; during construction aren&#39;t lost; they are future tax savings. Keep your digital records for the life of the investment to prove your cost base.</p><p>2. Protect Your Loan Purpose: Avoid mixing personal and investment funds in the same redraw facility. Keeping your debt &quot;clean&quot; is the best way to avoid an ATO audit.</p><p>3. Watch the Six-Year Clock: The Main Residence Exemption is incredibly valuable. If you are approaching the six-year mark of renting out your former home, seek advice on whether to sell or move back in to protect your tax-free gains.</p><p>Final Tip: With the 2026 Federal Budget approaching, stay tuned for updates regarding the general CGT discount and potential changes to negative gearing.</p><p><br></p>