ATO Interpretative Decision
ATO ID 2001/174 (Withdrawn)
Income Tax
Borrowing expenses - Stamp Duty on transfer of title, Lands Title Office search and registration of title feesFOI status: may be released
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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision. Further information can also be found in Rental properties (NAT 1729)This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are the costs associated with the transfer of title on purchase of a rental property deductible as borrowing expenses under section 25-25 of the Income Tax Assessment Act 1997 (ITAA 1997).
Decision
No. The costs associated with the transfer of title on purchase of a rental property are not borrowing expenses for the purposes of section 25-25 of the ITAA 1997.
Facts
The taxpayer took out a loan to purchase a property that was to be used to derive rental income.
Included in the taxpayer's subsequent claim for a deduction of borrowing expenses, were the costs of transferring the title of the property, that is:
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- Stamp Duty on Transfer
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- Land Titles Office Fee
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- Registration of Title Fee
Reasons For Decision
Borrowing expenses are deductible in accordance with section 25-25 of the ITAA 1997. Borrowing is defined in section 995-1 of the ITAA 1997.
Borrowing expenses are expenses which relate to the actual borrowing of monies. Typically these would include costs such as application and other fees charged by the lender (e.g., valuation fees) and stamp duty on mortgage contract.
The costs of transferring the title from the vendor to the purchaser are not costs associated with the borrowing of funds. These are costs of acquisition and would be incurred regardless of whether or not money was borrowed to finance the purchase.
Whilst not deductible as borrowing expenses, these transfer costs may form part of the property's cost base for capital gains tax purposes: refer to section 110 -35 of the ITAA 1997.
Date of decision: 29 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 25-25
section 110-35
section 995-1
Keywords
Expenses of borrowing
Rental expenses
Rental property
CGT cost base
ISSN: 1445-2782
| Date: | Version: | |
| 29 June 2001 | Original statement | |
| You are here | 6 June 2008 | Archived |