"All bank fees to establish the loan are called borrowing expenses and are amortised over a five year (60 months)period or the length of the loan whichever is the shortest period.
The new loan costs will be deductible over 5 years/60 months. The amount claimable will be $7,308 over 60 month equals $122 per month for nine months of the 2010 financial year is $1,098.
The old loan exit fees will be deductible this year, as the same rules as above apply except that the loan has been paid out therefore you can claim the balance of all borrowing costs on this particular loan. So all $8,850 in costs will be claimable this year.
They are legitimate expenses, but just a warning that I am pretty sure with such a big claim we will be waving a red flag at the ATO, so we need to ensure all our paperwork is spot on this year."