When refinancing tax deductible debt how perfectly does the new and old loans need to match up? For example my loan at the beginning of the refinance process is $200k, but as I am paying P+I repayments it is going down over time. There is also the cost of refinancing which costs $950, so the refinanced amount is $201k to ensure all costs are covered including accrued interest between repayments, the actual settlement takes place 8 weeks later and by then the payout to the bank has decreased to $198,953.40. Does it matter that the actual amount paid out plus costs equals $199,903.40 and the new loan amount is $201,000? Considering it is essentially impossible to guess the exact payout figure (even for interest only loans) when the amount is applied for, what level of leniency is allowable for slight miscalculation? Ie would the $201k in this case still be completely tax deductible?
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1 replies
Hi @Sootyiscool
The precise amount of your investment related debt is not important as it is not tax deductible.
You can only claim deductions for the interest and other costs associated with the loan. The loan principal is not deductible.
Check out our interest expenses article, this will give you further guidance on what you can claim.
All replies
Hi @Sootyiscool
The precise amount of your investment related debt is not important as it is not tax deductible.
You can only claim deductions for the interest and other costs associated with the loan. The loan principal is not deductible.
Check out our interest expenses article, this will give you further guidance on what you can claim.
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