Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012301343082

Ruling

Subject: Rental property expenses

Question and answer

Are the fees associated with refinancing a loan deductible?

Yes.

This ruling applies for the following periods:

Year ending 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

You have a rental property.

You refinanced the loan on the rental property.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 25-25.

Reasons for decision

Borrowing expenses are expenses directly incurred in taking out a loan for a rental property and are deductible under section 25-25 of the Income Tax Assessment Act 1997. Allowable borrowing expenses may include loan establishment fees, title search fees and costs for preparing and filing mortgage documents including mortgage broker fees and stamp duty charged on the mortgage.

The costs associated with refinancing a loan are also included.

If your total borrowing expenses are more than $100, the deduction is spread over five years, or the term of the loan, whichever is less. If you repay a loan early and in less than five years, you can claim a deduction for the balance of the borrowing expenses in the year of repayment. If you obtained the loan part way through the income year, the deduction for the first year will be apportioned according to the number of days in the year that you had the loan.

In your case, you have refinanced your loan and incurred fees.

These expenses are deductible under section 25-25 of the Income Tax Assessment Act 1997.


Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).