Tax Tip 131: Breaking a Fixed Loan – 3 Different Tax Consequences

Discussion in 'Accounting & Tax' started by Terry_w, 30th May, 2016.

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  1. craigc

    craigc Well-Known Member

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    Hi TerryW, Paul,
    If Rob had a partially debt recycled loan secured by his PPOR, say 50% PPOR related, 50% for an IP. Would the break costs (to refinance) be apportioned?
    Ie 50% break cost assigned to PPOR portion of the loan and added to capital cost base,
    50% break cost assigned to IP portion of the loan and then tax deductible (as is being refinanced as noted above).
    This would seem logical to me, but doesn’t mean it is correct. :)thanks
     
    craigc, 8th Apr, 2020
    #21
  2. Paul@PAS

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

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    I dont see what the asset used as security has to do with anything. Its how the borrowed funds were used. If its a blended loan the break fee will also need apportioning to each element ie private + IP.
     
    Paul@PAS, 8th Apr, 2020
    #22
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  3. Terry_w

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

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    Yes if a mixed loan it would be apportioned. If split the break cost would relate to that split so no apportionmnent
     
    Terry_w, 8th Apr, 2020
    #23
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