I wanted to understand from an ATO and and Loan Structure perspective, how are the expenses towards an IP treated.
1) Borrowing Expenses and Interest on Borrowing Expenses (Eg LMI, Mortgage Rego, Loan Set up, etc). Can the amount and the interest on the borrowed amount be claimed as Tax Deductions year after year or is just as a one off tax deductions?
2) Outgoings and Interest on Outgoings (Eg Council Rates, Water, etc.). Can only the expenses be claimed as Tax Deductions or Interest on the expenses is also Tax Deductible?
cheers
AM2778the borrowed amount is capital so it is not deductible.
1. The borrowing expenses themselves can be claimed over 5 years or the term of the loan if shorter. If you borrow to pay the borrowing expenses then the interest on this should be deductible too (eg capitalising LMI)
2. If you borrow to pay rates and other expenses then the interest on this would also normally be deductible if it is an investment property.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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