Claiming purchasing/borrowing costs from PPOR turned investment

I recently converted my PPOR of 2yr into investment. I would like to know what purchasing expenses I am eligible to claim pro rata or full in my situation. For example, solicitor fees, pest/building inspection, borrowing costs, ect.
 
Purchasing costs - not deductible whether ppor nor IP. So a non issue at this point. They do form part of the CGT calculations when you sell, though.

Borrowing costs - these are deductible over 5 years, ie 20% of them per year. So, if it was ppor for 2 yrs and IP for 3 yrs, then I think it'd be fair to deduct 0 in year 1 and 2, and 20% each of years 3, 4 and 5.

However, I'm not an accountant. Check with your own to be sure.
 
I would agree with DT except its really not 20% "per year"...Its claimed over 60 months (yes thats 5 years) or the loan term whichever is shorter. Reality is you probably didnt acquire it on 1st July. Using 60th mths v's 20% on a yearly basis is more accurate.

Of course the usual advice is to value the property when its first used to produce income and get a QS report that reflects the 2 year approach you described.
 
I would agree with DT except its really not 20% "per year"...Its claimed over 60 months (yes thats 5 years) or the loan term whichever is shorter. Reality is you probably didnt acquire it on 1st July. Using 60th mths v's 20% on a yearly basis is more accurate.

Of course the usual advice is to value the property when its first used to produce income and get a QS report that reflects the 2 year approach you described.

Thanks for the replies, Paul and Dave.

So what if the original loan term was 25 years but it is refinanced after 2 years?
 
I would agree with DT except its really not 20% "per year"...Its claimed over 60 months (yes thats 5 years) or the loan term whichever is shorter. Reality is you probably didnt acquire it on 1st July. Using 60th mths v's 20% on a yearly basis is more accurate.

That's different to how I've previously had it explained.

Are you saying if someone acquires an IP on June 1st (ie, late in the financial year), then they should only claim 1/60th of the borrowing expenses?
 
Thanks for the replies, Paul and Dave.

So what if the original loan term was 25 years but it is refinanced after 2 years?

See Paul's comment:
or the loan term whichever is shorter

One loan term ending = rest of borrowing costs could be claimed
new loan term starting = bororwing costs over 5 years.
 
@ D.T., yeah the borrowing cost are calculated on a pro rats basis in the first year of ownership, similar to depreciation
 
Back
Top