Quick ACT tax Question

From: Geoff Donges



Being in the ACT & able to claim all purchase/lease costs in the first year in my tax return, how does this work in regard to borrowing costs. Do I still have to spread the borrowing costs over 5 years?

I also presume that Mortgage Insurance is a borrowing cost. Though I can't find it mentioned on any ATO help file.

Thanks.
 
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Reply: 1
From: Dale Gatherum-Goss


Hi Geoff

Yes, mortgage insurance is a borrowing cost and as such is normally written off over the life of the loan or 5 years, whichever is the shorter.

If we argue that the purchase is indeed a long term lease aka the stamp duty issue, then by the same reasoning the borrowing costs should also be tax deductible.

As you have identified, there is very little information available though.

have fun

Dale
 
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Reply: 1.1
From: Geoff Donges



Thanks Dale

My only other "dark area" is the on "rate certificates". I'm not sure if they would come under borrowing costs or legals.
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Geoff

What exactly do you mean? The council rates adjusted on settlement are an expense and claimed on your tax return against the rental income.

Have I just answered your question? If not, just ask away and I will do my best.

Have fun

Dale
 
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Reply: 1.1.1.1
From: Geoff Donges



Hi Dale

What you are talking about are on the Settlement Statement & I have claimed them against my rental income. The Rate Certificates I'm talking about come up on my solicitors bill under monies he has paid from money I put in his trust account.
There are three items here:
ACT Revenue Office: rate certificate $30
ACTEWAGL: rate certificate $25
Register General: fee on search of Title & Units Plan. $47
The last one would be classified as a borrowing cost. I'm just a little puzzled as to what the rate certificates are, as they are different from the rate adjustments in the settlement statement.

Any clues. Do you think I should just include them in my claim against my rental income or add them to my legal costs?

Thanks again Dale
 
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Reply: 1.1.1.1.1
From: Dale Gatherum-Goss


Hi Geoff!

Thanks for the extra information. Under normal circumstances, the certificates are costs of buying the property, however, in the ACT I would claim these as lease expenses and therefore an outright tax deduction like your legal fees.

Cheers

Dale
 
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Reply: 1.1.1.1.1.1
From: Geoff Donges



Thanks Dale, very much appreciated.
 
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Reply: 1.1.1.1.1.1.1
From: Rixter ®


On Ya Dale,

You have come through again. If the Queen gave Knight Hoods for Good Reliable Friendly Service with out fees being charged, I'd nominate you onto her Honours List


Happy Investing,
Rixter :)
 
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Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hiya Rixter!

Damn!!!!!! Every year for the last 20 years, I have been disappointed that I've missed out on the Queens Birthday awards and Oztralia day awards . . . shit!! You mean I've still gotta wait.

Damn. Niceness didn't work, maybe blackmail might. Time for plan B, C or D.

Have fun

Dale
 
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