All Topics / Help Needed! / purchasing costs – which are tax deductible?

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  • Profile photo of redleavesredleaves
    Member
    @redleaves
    Join Date: 2006
    Post Count: 54

    Hi,
    Re: purchasing costs, I’ve come up with the following:
    LMI
    Stamp duty
    building and pest inspeciton
    Conveyancing
    building insurance

    I have two questions
    a) Have I missed any?
    b) Which (if any) of these are tax deductible??
    Thanks!

    Profile photo of alto55alto55
    Participant
    @alto55
    Join Date: 2006
    Post Count: 23

    Hi,
    Mortgage insurance, Bank fees, stamp duty on mortgage
    are classified as borrowing expenses, and iare tax deductible
    over five years. Insurance, Council & water rates (you will have to
    pay at settlement) are tax deductible.
    Building, pest inspection and conveyancing expenses are part
    of the capital cost. If you buy an investment property better to get a depreciation report too which cost around $300. That is tax deductible.

    Cheers
    alto

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Stamp duty is tax deductible too, but only taken into account when the property is sold – except in the ACT where it can be claimed straight away apparently.

    Terryw
    Discover Home Loans
    Parramatta
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    Profile photo of alto55alto55
    Participant
    @alto55
    Join Date: 2006
    Post Count: 23

    Stamp duty is tax deductible too, but only taken into account when the property is sold – except in the ACT where it can be claimed straight away apparently.

    Terryw,

    Where did you get this information? I would like to look this up.
    I thought the income tax law works the same way in all States.

    Alto55

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I cannot remember, think it may have been from a client in the ACT. May have something to do with the landtitles down there. Aren’t they all leasehold?

    Terryw
    Discover Home Loans
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Hi Readleaves,

    You can download a “Property Purchase Budget Planner” template for free off http://www.propertydivas.com.au if you’re looking at purchasing a property soon.

    Borrowing expenses such as LMI, stamp duty on a mortage, application fees and bank charges are all tax deductible over a period of 5 years assuming it is going to be rented.

    For upfront costs such as building and pest inspection these will be added to the cost base of the property, along with property stamp duty and legals, so you can’t claim them upfront, but they do reduce your capital gains tax when you sell later on.

    Building insurance & rates will be tax deductible only from when the property becomes available for rent.

    Not sure about the stamp duty in ACT, but Terry is correct in saying the houses there are all 99year leasehold, so I’d suggest you investigate this further if you live in ACT.

    Hope this makes it clearer.

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Just one thing borrowing expenses are deducted over 5 Years or the term of the loan if shorter and a proportionalised in the first year.

    i.e If you settle 1 Jan then you only cliam the appropriate number of days to 30 June.

    If the loan is over a 3 year period then the deductions are spread over the loan term and not 5 years.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
    [email protected]
    Looking for life cover – We Guarantee to beat any quote you have in writing.

    Richard Taylor | Australia's leading private lender

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