Hi Everyone
I'm a young and new investor and recently purchased my first IP back in December 07 and awaiting for settlement @ the end of the month
Anyways, I have a few questions and it would be great if anyone could provide help shed some light on the matter:
1) I am in NSW (Sydney), is the stamp duty tax deductible? If so, does this include the stamp duty for the actual purchase price and the stamp duty on the loan?
2) I heard mortgage insurance (if any) is deductible?
3) My loan is Principal + Interest (a bit different to the norm on this forum). Can I still get an accountant to calculate the interest portion each year for tax deduction purposes or is this only for investors with IO loans?
Obviously I will be looking at finding an accountant to help me with these matters but just want to satisfy my curiousity for now.
Thanks Alot
Eric
Eric,
Stamp duty – this is a cost which is generally capitalised both on the land and the mortgage – no instant claim there unfortunately.
Your bank will issue you a statement, at least annually detailing any interest charges or other costs as well as payments received. The account should work so that the full value of the repayment is applied to the loan and then the interest deducted to create the new balance.
If you are able to, take advantage of an offset account to allow any surplus funds to sit against the loan and to reduce your interest charges.
Eric
Firstly welcome to the forum and i hope you enjoy your time aboard
In answer to your questions:
1) I am in NSW (Sydney), is the stamp duty tax deductible? If so, does this include the stamp duty for the actual purchase price
and the stamp duty on the loan?A) Ther Transfer duty is added to the Cost Base of the property and is therefore offset against any CGT down the track. The Mortgage Duty is a borrowing expense and therefore can be claimed over a 5 year term or the length of the loan whichever is the shorter. it is proportionalised in Year 1.
2) I heard mortgage insurance (if any) is deductible?
A) Yes mortgage insurance is another borrowing cost and again a in 1) above is deductible over 5 years or the term of the loan.
3) My loan is Principal + Interest (a bit different to the norm on this forum). Can I still get an accountant to calculate the interest portion each year for tax deduction purposes or is this only for investors with IO loans?
A) Each month your lender will set out the amount of interest charged for the period and at the end of the financial year end you will receive a statement advising you how much interest was charged for that year.
Richard Taylor | Australia's leading private lender
cheers mate
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