Borrowing costs (to be amortised over 5yrs) - what are they?

hi guys

I'm trying to put together paperwork and info for tax return ...

Bought a property last financial year ... and I believe I can claim borrowing costs amortised over 5yrs

can someone please remind me what makes up borrowing costs?

any of these qualify?

[following were deducted from the loan proceeds on settlement]
mortgage registration fee
registration fee discharge
registration fee transfer
property search fee
settlement processing fee
bank cheque fee

anything else?

I used to have a list ... cannot remember where I saved it ...

Thank youuuu in advance!

 

They sound like settlement/conveyancing costs. Borrowing costs = LMI, lender valuations, application fees, registration of mortgage.

Don't forget you cannot claim 20% the first year, but must apportion it for the number of days.

 

thank you terry!
so settlement/convenyancing costs are not borrowing costs?

what about mortgage discharge fees (i had to discharge the mortgage with one bank to refi with another bank/register new mortgage for higher amount)

 

how do I find out how much I paid for mortgage registration cost?
I checked my loan statements and cant seem to find a line for it ...

thanks terry! sorry for the super noob questions

 

All these costs should appear in the settlement statement you received from your conveyancer. You can also calculate mortgage registration by going to the relevant state revenue office website and using their stamp duty calculators which usually break it down for you.

 

Conveyancing relates to the transfer of title, not borrowings, so a capital cost.

Mortgage discharge fees are not a borrowing cost either. These costs would be deductible in full under s25-30 ITAA97. (assuming they relate to an investment loan).

 

thank you both!

 

Could I please tag on and ask a quick question: if I'm in year 4 of calculating borrowing expense and I've refinanced, can I use the total remaining amount?

eg. year 4 would be x of $698 = $139 but I would put down $698 instead?

Thanks

 

yes you could claim the remaining part you haven't claimed.

 

What I have found useful was an information pack from the ATO see page 15: https://www.ato.gov.au/Individuals/Tax-return/2015/In-detail/Publications/Rental-properties-2014-15/

Based on this, it looks like the fees for the (1) registration of a mortgage (2) search title, are "borrowing costs".

On the other hand, a transfer of land fee seems to be related to convenyancing, therefore its not a "borrowing cost". Is my understanding correct?

 

Hi Terry
If you buy a PPOR and then turn it into an investment, can you claim the borrowing costs?

 

Yes - but only over the first 5 years it was owned. e.g. you rent it out in year 4 you could only claim 20%, roughly, in that year and none thereafter.

but keep the documents handy as when sold you can claim the unclaimed part against CGT.