PPOR Tax Question?

From: Alan Hill

I was wondering if one of our friendly accountants could answer a question for me?

Let's assume your PPOR had been used to cross-collaterise at least one Investment Property and then you refinance all properties including your PPOR. Various LOC's are subsequently put in place on your PPOR for various Investment purposes and the Investment Property Loans effectively 'stand alone'.

As part of the refinancing I realise the Stamp Duties, Breakcosts etc on the Investment Properties would be tax deductible, but what about these costs on the PPOR?

The PPOR was previously being used for Investment purposes of a sort via cross-collaterising an Investment Property. Also the purpose of all the refinancing, including the PPOR was to enhance investment structuring.

Would any breakcosts and other costs related to the PPOR Refinance be tax deductible?

Thanks in advance guys.

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Reply: 1
From: Rolf Latham

Hi Allan

As you know Im not a bean counter, but if you have gone down the track to improve your serviceability etc by doing refinance to another lender and using bonds etc, it should be tax depreciable borrow cost because the primary purpose is for you to be able to do the next deal, which you will eventually pay income tax on.

The logic behind the argument is if the interest for the bond is deductible then the borrow costs for you to be able to obtain it must also be.


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Reply: 1.1
From: Alan Hill

Well it looks like your the only response with this one Rolf. Thanks for that anyway. Much appreciated.

Yes, this is always the assumption I had worked on too. I was talking to someone the other day about PPOR refinance though and it was just a point I wanted to double check.

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Reply: 1.1.1
From: Dale Gatherum-Goss

Hi Alan

I'm sorry for not answering your original question.

Yes, I believe that if the costs were incurred in earning an income then yes, they should be tax deductible.

I agreed with Rolf and so didn't think it worth answering just to confirm his thoughts. I'm sorry if this disappointed you.

Have fun

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From: Alan Hill

Didn't disappoint me Dale :)

Mind you, some of the flack you mentioned you received in another post DID disappoint me. I with Nigel. Tell them to "stick it!"

Thanks for the feedback.

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