N00b Q: what bank costs are tax deductible?

Straightforward (hopefully!) question to refresh ahead of hitting tax return time.

Which of the following bank related fees are tax deductible?
- Admin fees for the investment loans (monthly, or annual package costs)
- Break penalty fees when ending a Fixed rate term early
- Settlement adjustment sheets - not quite sure what part of this is useful for tax return purposes.

I know bank interest is tax deductible.
Thanks!

 

Yes.

Yes.

The portion of costs adjustments (like rates) will show you the net increase of decreased spend on these costs as a result of settlement.

The normal rules apply to the above - so the loan needs to have been only used for income producing purposes and so forth.

 

@Ross Forrester you legend

 

Borrowing expenses paid to a lender are not all immediately deductible, Monthly would. Annual fees need to consider what services are included ie if the home loan and IP loan are under the package apportioning will be a issue.

A fee to facilitate or settle the loan may be over 60mths

A break fee is often deductible when it reverts from fixed to variable and continues. If paid out it may be a CGT cost so watch the timing of break fees

The settlement adjustment sheet includes tax deductions eg If you pay $1K towards the vendors rates then it effectively like paying council and may be deductible for an IP as it was incurred at the point. Other settled costs can be water, rates, strata

Sorry but a Yes response doesnt explain it sufficiently. I'm just editing a video on deductions for borrowing expenses and break costs and settlement adjustments for our PAS TV - I hope to post it within 2 days on PAS TV.

 

Hi Paul,

We have recently refinanced our OO and IP loan under one lender, the annual packaged falls under the OO loan, but also applies to the IP loan. How does apportioning work here? when the loans were with separate lenders, the annual fee on the IP was easily deductible.

 

You can work it out on a reasonable basis. One basis might be to apportion based on loan size.

 

Thanks Terry, sounds reasonable! This setup will probably last a year or so as the OO will likely be turned into IP.

 

Based on days and apportioned to each loan purpose. However if you refinance and seek a new loan the new LMI may relate to just one purpose for the new advance