OO to Investment loan - tax deductions

Discussion in 'Loans & Mortgage Brokers' started by jogo90, 27th Jan, 2022.

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  1. jogo90

    jogo90 Member

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    Hi,

    I'm wondering if I capitalise LMI on my owner occupier property and then turn it into an investment loan in 12 months, would the subsequent LMI yearly payments be tax deductible? Or would they not be because it was initiated under owner occupier loan?

    Thank you!
     
    jogo90, 27th Jan, 2022
    #1
  2. Terry_w

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

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    Remaining 4 years worth could potentially be deductible
     
    Terry_w, 27th Jan, 2022
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  3. Trainee

    Trainee Well-Known Member

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    What are subsequent LMI yearly payments?
     
    Trainee, 27th Jan, 2022
    #3
  4. Ross Forrester

    Ross Forrester Well-Known Member

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    The cost of LMI is spread over a few years. You will miss out on the portion while it was a family home. However the remaining undeducted portion of the LMI not yet claimed might become eligible for a tax deduction if the use of the asset changes.
     
    Ross Forrester, 27th Jan, 2022
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  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    LMI is a one off premium, paid when the loan is opened. You don't pay it annually.

    You may be able to claim part of it back on your tax over time, ask your accountant about this.
     
    Peter_Tersteeg, 27th Jan, 2022
    #5
  6. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    As above, pro rata deductibility
     
    Tony Xia, 28th Jan, 2022
    #6
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