How to claim borrowing costs on Investment Property and Shares.

If you choose to borrow (or refinance) for an investment property or shares, then the costs of borrowing can become a tax deduction – for up to 6 years in some cases.

Examples of borrowing costs include mortgage insurance and loan charges, and with the right advice we can save our clients $1,000’s!

But there are a few boxes you need to tick.

This is where our years of experience maximising these types of deductions comes to the fore.

While it can get quite complex, here are a few basic guidelines about writing off borrowing costs:

  • Costs of borrowing can create an immediate tax deduction over 5 years or the term of the loan, whatever is shorter.
  • Each borrowing cost is claimed on a pro rata basis from the date it is eligible to be deducted. Ask us for an example on how this would work for you.
  • If the aggregate borrowing costs is under $100, it may be claimed in the year it is incurred.
  • Certain loan costs such as interest charges, monthly account keeping fees and annual loan fees may not be considered borrowing costs and may be deducted immediately when incurred. (This doesn’t apply if the asset is used privately).
  • If you refinance, you may be able to write off any remaining borrowing costs on the old loan, and start deducting any new borrowing costs on the new loan. You may also be able to deduct any unused loan fees.

Be aware that if you start using an asset for private use, this can affect your ability to claim borrowing costs.

However, in the case of property, you may be able to add the unused borrowing cost to the cost base of the asset and potentially increase the property cost while reducing capital gain.

Whether you have a simple or complex situation, we want to see your investment succeed.

Our accountants have extensive experience with investments, properties and shares, and can help you put the most tax-effective strategies in place.

So don’t miss out on potentially saving $1,000’s! One simple meeting can reveal where the gaps are in your deductions. Request a callback below or call us on 1300 135 918 to get the conversation started.

Please note: this is general information only and should not be used as advice. You should seek advice before acting on any information.

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Chartered Accounting firm in Sydney, Australia.

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