Borrowing Costs?

[SliderC]

Hi Guys,
My understanding is that borrowing costs can be deducted over 5 years or the life of the loan (whichever is shorter).

I know this includes mortgage insurance however had a few bank fees at settlement I wanted to query:

* Land Titles Fee ~$1100
* Settlement Fee $200
* Bank Cheque Fee $70

Can you confirm that these are deductable under borrowing costs over 5 years.

Cheers.

 

[D.T.]

Check with your accountant, but you may find that the answer to those ones is no. They would be capital in nature used as part of the cost calculation for CGT purposes if you sell.

 

[Terry_w]

Hi Guys,
My understanding is that borrowing costs can be deducted over 5 years or the life of the loan (whichever is shorter).

I know this includes mortgage insurance however had a few bank fees at settlement I wanted to query:

* Land Titles Fee ~$1100
* Settlement Fee $200
* Bank Cheque Fee $70

Can you confirm that these are deductable under borrowing costs over 5 years.

Cheers.

Land titles fees would be a government charge to register the transfer or similar. A capital expense

Settlement fee could be for the lender to attend settlement and would therefore be a borrowing cost.

Bank cheque is for settlement cheques. Not really a borrowing cost as you would incur this anyway even if you were not borrowing to buy the property.

 

[Paul@PFI]

A guide to what ATO consider borrowing expenses may include:

- stamp duty charged on the mortgage
- loan establishment fees
- title search fees charged by your lender
- costs (including solicitors' fees) for preparing and filing mortgage documents
- mortgage broker fees
- fees for a valuation required for loan approval
- lender's mortgage insurance, which is insurance taken out by the lender and billed to you.

https://www.ato.gov.au/General/Prop...perties---claiming-borrowing-expenses/?page=2

 

[aaronjod]

So Paul, how does this apply if you borrowed for stamp duty and LMI?

 

[Terry_w]

So Paul, how does this apply if you borrowed for stamp duty and LMI?

You have still incurred the cost of the stamp duty and LMI so no difference to the claiming of these other than you may also be able to claim the interest on these loans.

 

[aaronjod]

So the stamp duty + LMI can be deducted over 5 years and the interest on the loan as long as it's there?

 

[D.T.]

So the stamp duty + LMI can be deducted over 5 years and the interest on the loan as long as it's there?

Be careful when you say stamp duty. There's stamp duty on the purchase/transfer of the property, and there's stamp duty payable on the mortgage. These are different.

 

[Rob G.]

Be careful when you say stamp duty. There's stamp duty on the purchase/transfer of the property, and there's stamp duty payable on the mortgage. These are different.

Is there any state that still charges stamp duty on financial products?

 

[Terry_w]

Is there any state that still charges stamp duty on financial products?

Yes, NSW does. but there is an exemption for natural persons buying property. Lines of credit still attract duty as do loans for a company purchasing real property.