Is it possible to backdate LMI claim?

Discussion in 'Accounting & Tax' started by PorkBellyLover, 9th Jul, 2018.

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  1. PorkBellyLover

    PorkBellyLover Active Member

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    Hi PC Tax gurus,

    I bought a property back in Dec 2015 and paid LMI in the process. I moved out after a year and turned it into an IP and it's been rented out since Dec 2016.

    In last FY tax return (2016-2017), my accountant didn't include the LMI as a deductible item.

    My questions are:
    1. Is it still possible to claim the LMI this year?
    2. If yes, is it possible to back-claim the LMI from Dec 2016?
    Thank you in advance!
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. yes
    2. no. you would need to amend the previous 2 years tax returns.
     
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  3. PorkBellyLover

    PorkBellyLover Active Member

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    Thanks Terry, one more question please, when you said "need to amend the previous 2 years", what is involved here? Is there fee associated to it?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should speak to your tax agent about that. Extra work would mean extra fees I imagine unless they were negligent
     
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  5. PorkBellyLover

    PorkBellyLover Active Member

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    Awesome, great advice as usual, thank you!
     
  6. K@thy T

    K@thy T Active Member

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    Hi Terry,
    My accountant hasn’t been claiming borrowing expense deductions for me, so which income tax years would I need to amend in my situation?
    - Mar 2014 paid LMI on land loan
    - Oct 2014 paid LMI on construction loan
    - Jul 2015 property first earned rental income
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If you didn't claim in 2014 and 2015 , and were entitled to, these would need to be amended, but you might be out of time now.
     
  8. Paul@PAS

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

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    Typically a 2 or 4 year (rare) amendment period applies based on the original assessment date. That said the $$$ not claimed may be a 3rd element CGT cost and assist to reduce a future capital gain. The history of the loan also needs review. If it has been refinanced in that period it may trigger the balance to have been deductible at a past point in time.
     
  9. K@thy T

    K@thy T Active Member

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    Is LMI claimable in the income year it is incurred or when the IP first earned rental income?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    usually over 5 years of when it is incurred
     
  11. Paul@PAS

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

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    And that doesnt mean 20% each year. 60months / 1826 days . So the first 6 months may be non-deductible if it was your home and then the apportionment becomes deductible once its available.
     
  12. K@thy T

    K@thy T Active Member

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    Thanks Terry.
     
  13. K@thy T

    K@thy T Active Member

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    My property has always been an investment property from day one.
     
  14. K@thy T

    K@thy T Active Member

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    I just logged on to ATO online services and it looks like I can amend from 2014/2015 income year online. Which means I can’t do an adjustment online for 1 year component from the LMI paid on the land in Mar 2014. Everything else can be amended online.
     
  15. Paul@PAS

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

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    It may allow that BUT they can also refuse after 2 years and will write to you to reject the request. Are you a SPOR taxpayer ?
    Amendment periods

    Short Period of review. In which case amendments are capped at 2 years or perhaps longer IF the Commissioners considers there are grounds to allow you to amend after 730 days. You may have difficulty meeting a extension based on a objection.
     
  16. K@thy T

    K@thy T Active Member

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    OK, to be safe I’ll just amend 2016/2017, 2017/2018 and this year. As I’ve already lodged my returns this year. Does that make it 3 years of amendments?
     
  17. K@thy T

    K@thy T Active Member

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    Even though an amendment option is available for 2014/2015 and 2015/2016, it’s actually not allowed and gave me a message that the amendment period has lapsed. For 2016/2017, I was able to put in my amendment but got stuck as it kept asking me to fix fields like ‘net farm management deposits or repayments’. No idea what that is so I gave up.
     
  18. Paul@PAS

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

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    Just dont make the mistake of lumping the years you cant amend into the years you can.
     
  19. K@thy T

    K@thy T Active Member

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    No I only claimed the portions I’m entitled to in 2017/2018 and 2018/2019. I guess the rest of it can be looked at when I sell the house?
     
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