Claiming Borrowing Expenses

(last updated 27/03/2014)

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What are Borrowing Expenses

Borrowing expenses are commonly incurred when establising a loan. Where the purpose of the loan is for producing income, such as a rental preoperty, share portfolio or car or other business related equipment etc, the borrowing expenses are an allowable tax deduction.

How to Claim Borrowing Expenses 

Borrowing expenses are considered a "capital" outlay, which means it can not normally be written off as an expense streight away. However, the ATO permits borrowing expenses to be claimed on one of two ways:
  • Borrowing costs less than  $100 - A 100% write-off is allowed when the total of the borrowing costs is less than $100. 
  • Borrowing costs greater than $100 - where the borrowing costs exceed $100, they must be apportioned and deduced over five years or the term of the loan - whichever is shorter.

What expenses are included as borrowing expenses?

The following is a checklist of expenses that are considered borrowing costs:
  • stamp duty charged on the mortgage
  • loan establishment fees charged by te financial institution
  • title search fees charged by your lender
  • costs for preparing and filing mortgage documents
  • mortgage broker fees
  • fees for a valuation required for loan approval, and
  • lender's mortgage insurance, which is insurance taken out by the lender and billed to you.

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