Hi,
I understand that some of the borrowing expenses such as Lender's legal fees, mortgage registration fees and loan application fee are deductible over the number of years. Most of the info I found says five years.
I am planning to rent this IP out for two years before turning it into my PPOR.
Can I claim these borrowing expenses over two years instead of five in this case?
Also, is rate lock fee considered as 'loan application fee' and hence can be claimed over number of years, or can the total amount be claimed in the first year?
Thank you,
Sayan.
I'm not an accountant but I'd assume they'd be claimable expenses during the period the property is an IP.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks, Jamie. That was quick!
It does make sense to use the number of years the property is rented out. Also, found this:
Borrowing Expenses – deductible over the period of the loan where the loan is less than five years. Otherwise deductible over five years.
Cheers,
Sayan
Costs associated with borrowing the money required to purchase the property are not deductible upfront, they are deductible over the shorter of either the period of the loan or five years.
Borrowing expenses include mortgage insurance, title search fees, registration of mortgage, stamp duty on mortgage and loan establishment fees to name a few.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Sayan,
I think in that case you can only claim 20% of the deduction over each of the first two years, and then it is no longer deductible. Like Jamie, not an accountant so you would need to get this clarified.
Cheers
Tom
Bang on Tom would be proportionally deductible.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks, Tom.
According to below, would it meant that if I happened to turn the IP into PPOR after the second year, then a deduction of the balance of the borrowing expenses (over $100) can be claimed in that year?
" If your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, whichever is less. If the total deductible borrowing expenses are $100 or less, they are fully deductible in the income year they are incurred.
If you repay the loan early and in less than five years, you can claim a deduction for the balance of the borrowing expenses in the year of repayment."
Cheers,
Sayan.
That's right Sayan you have it in one.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks very much, guys!
Sayan
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