Hi trusted accountants
My memory is failing me… At which point in your tax return do you claim the BANK FEES charged on loans held for investment purposes?? It doesn’t seem to fit the definition of either Borrowing Expenses (and I checked 2011 and didn’t claim them there) or Interest expenses…
Would really appreciate a friendly reminder at what point to claim these.
Thanks,
EmmaYou claim them in the year they are incurred.
If you mean where on the forms it would be on the investment property schedule.
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
sorry Terry, yes I do mean in the year they are incurred.
And as for the investment property schedule, where exactly? under V – sundry rental expenses? as I see no relevant place in A – U in which to record them…
Hi Emma,
You are correct – it does go under F – Borrowing Expenses. (Bank fees, as well as LMI if you were claiming over five years)
Cheers
I don't know if that is correct v8. Bank fees – I assume monthly or yearly fees – these wouldn't be a borrowing expense but a general running expense such as rates, insurance etc. I am not sure where on the form you claim them, but it would be the same as rates.
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
After more reading I put then under sundry expenses. The ATO definition of what can be claimed as borrowing expenses is clearly not inclusive of regular annual fees… Sundry is for everything not already claimed and as there was no better place I put them under sundry.
Terryw wrote:I don't know if that is correct v8. Bank fees – I assume monthly or yearly fees – these wouldn't be a borrowing expense but a general running expense such as rates, insurance etc. I am not sure where on the form you claim them, but it would be the same as rates.THanks Terry – I have just gone through the 2012 ATO guidelines for rental property deductions and I am not as confident with my original info now. Etax itself seemed to allude to that, in that borrowing expenses were anything relating to the loan other than interest, but even though not mentioned in the 2012 specifically bank fees, the definition of borrowing expenses does only cover on expenses and bank charges on taking out the original loan, including LMI (as mentioned deductible over 5 years) any valuation costs, etc
SO……the sundry expenses may be a better option. I have pasted the definition from the publication of borrowing expense below, and while it will in no way affect the outcome of the claim, I do apologise if I have mislead anyone.QUOTE -BORROWING EXPENSES
These are expenses directly incurred in taking out a loan
for the property. They include loan establishment fees, title
search fees and costs for preparing and filing mortgage
documents, including mortgage broker fees and stamp
duty charged on the mortgage.
Borrowing expenses also include other costs that the
lender requires you to incur as a condition of them lending
you the money for the property, such as the costs of
obtaining a valuation or lender’s mortgage insurance if you
borrow more than a certain percentage of the purchase
price of the property.
The following are not borrowing expenses:
n insurance policy premiums on a policy that provides for
your loan on the property to be paid out in the event that
you die or become disabled or unemployed
n interest expenses.
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.Cheers
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