Interest in Advance and Fixed interest term

Discussion in 'Accounting & Tax' started by act3548, 11th Apr, 2021.

Join Australia's most dynamic and respected property investment community
Tags:
  1. act3548

    act3548 Member

    Joined:
    3rd Apr, 2021
    Posts:
    17
    Location:
    Canberra
    Hi All.

    I am aware that a maximum of one year interest in advance can be claimed as a deduction in a taxable year. I have a question, 1. is it possible to fix the loan to a longer period e.g for 5 years and pre-pay a part of the loan e.g 12 months and 2. can this be repeated e.g prepay interest before 30th June for the following year.
     
    act3548, 11th Apr, 2021
    #1
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,654
    Location:
    Gold Coast (Australia Wide)
    with some lenders yes, with most lenders the fixed term must match IO period

    ta
    rolf
     
    Rolf Latham, 12th Apr, 2021
    #2
  3. act3548

    act3548 Member

    Joined:
    3rd Apr, 2021
    Posts:
    17
    Location:
    Canberra
    Thanks- What rates forum members are getting for 3 or 4 years "Interest Only - Residential Investment"
     
    act3548, 14th Apr, 2021
    #3
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,555
    Location:
    Sydney
    I have only ever heard from tax clients who want a 3-4 year fixed and prepay 1 year and its not allowed. They must have a 1 year fixed loan to prepay 12months.
    Definately a issue to discuss with your broker. I'm sure some do allow it.

    Rates vary with IO or P&I too. A issue to ask a broker. Canstar have some vague guidance if you want it vague.
     
    Paul@PAS, 15th Apr, 2021
    #4
Join Washington Brown's Tax Agent Referral Program