Hi,
This is an investment loan.
I'm in the process of refinancing, and the financier is stating that they will increase the borrowing limit, so that they can pay out the existing finance including any expenses. So basically, what are the tax implications of capitalising these costs, and also what happens with the remaining amount?
For instance, say it costs only about $700 to pay for administrative and legal costs to refinance the existing loan (which is what they are telling me) then the new financier lends me say an extra $3000, and pays me back the $2300 into my bank account, then what are the legal ramifications?
Do I have to pay that $2300 back into the loan to keep it tax deductible? Can I pay that $2300 back into the loan or would the loan then be mixed purpose?
Can refinancing costs like that be capitalised, so the interest on the existing loan amount + refinancing costs be tax deductible?
This appears to be a bit of a black spot from reading the ATO website. Any advice welcome, as I'm a bit confused.
cheers,
gabs
This is an investment loan.
I'm in the process of refinancing, and the financier is stating that they will increase the borrowing limit, so that they can pay out the existing finance including any expenses. So basically, what are the tax implications of capitalising these costs, and also what happens with the remaining amount?
For instance, say it costs only about $700 to pay for administrative and legal costs to refinance the existing loan (which is what they are telling me) then the new financier lends me say an extra $3000, and pays me back the $2300 into my bank account, then what are the legal ramifications?
Do I have to pay that $2300 back into the loan to keep it tax deductible? Can I pay that $2300 back into the loan or would the loan then be mixed purpose?
Can refinancing costs like that be capitalised, so the interest on the existing loan amount + refinancing costs be tax deductible?
This appears to be a bit of a black spot from reading the ATO website. Any advice welcome, as I'm a bit confused.
cheers,
gabs