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

Discussion in 'Accounting & Tax' started by bythebay, 8th Jul, 2015.

  1. bythebay

    bythebay Well-Known Member

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    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!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
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  3. bythebay

    bythebay Well-Known Member

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    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)
     
  4. bythebay

    bythebay Well-Known Member

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    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
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    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.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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).
     
  7. bythebay

    bythebay Well-Known Member

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    thank you both!
     
  8. paguatao

    paguatao Member

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    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
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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

    Roshy Member

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  11. smator

    smator Well-Known Member

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
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