A tax question



From: Goran Arsovski


I have a tax question which I would like to be answered.I recently purchased my first IP,on 30th of June 2001 to be exact.My bank manager advised me to settle before june 2001 as I would be able to claim mortgage insurance, application fees, solicitors fees and etc..for that year. I am not sure if this is possible since we did only pay the vendor the cost of the house before june 2001 all other fees mentioned above were deducted from my account a fortnight later within 2001-2002 financial year.I am just asking if there is an possible claim here or has my bank manager got no idea.
Also if I am not able to claim anything within 00-01 financial year would it be to late to apply for a reduction in salary tax through form 221D (I think) for 01-02 financial year and how does this form generally work even when your property is not occupied or the amount of rent fluctuates within the same year.

Thank you greatly and apologies for the long post.

Regards Goran.
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Reply: 1
From: Duncan M

With regards to borrowing costs. If they are over $100 the deduction must be spread over 5 years. If the loan is discharged before that time then all outstanding deductions can be claimed in that year.

I'm unsure of the issue regarding the debiting not taking place from your account until the new financial year. I believe you can only use "cash accounting" not "accrual accounting" for Rental Property, hence the date of the expense is the date the payment was made by you.

With regards to the 221D, you can lodge one for this financial year based on your estimation of the loss you will incur this year. They arent hard to complete, might be worth seeing an accountant beforehand to double check your assumptions as there are fines if you get it too wrong..

The form is online at:


And the contact number for queries is:

1300 360 221


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Reply: 1.1
From: Dale Gatherum-Goss


No, I am afraid that you cannot claim the costs in the 2001 year because you had not actually incurred the expenses in that year.

They are, of course, available for the 2002 year and onwards.

Yes, you should still get a QS report as this is often the cream on the deal.

And, the 221D variation is possible for 2002 despite how late in the year we are. I'm always wary of these things despite the many that I create. . . . but, each to their own.

I hope that this helps

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Reply: 1.1.1
From: Donna Larcos

When I mentioned the 221D to my
accountant he was also very hesitant.
Works well if you have a very defined
income i.e. salary and small investments
only. If you have family trust income etc it
can be a nightmare knowing what you will
walk away with from one year to the next -
it has varied between $500 and $12k.
Besides I'm afraid I'd be likely to blow my
$90 weekly saving on going out to dinner.
If I get the lump sum at the end of the
year, I can pay it straight off the
non-tax-deductible debt and feel quite
saintly and productive. Just got my
cheque back for this year $1500. Next
year the depreciation starts to cut in and
it will be $4500 the following year I think
will be close to $7000. It's starting to get
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