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LeoS(Newbie)Newbie
12 Sept 2022

Hi all,


I have an owner occupier property loan and an investment property loan. If expenses associated with refinancing both loans are $1000:


1) How would we split this expense for tax claiming?

2) Would this be filed under "borrowing expenses" for tax claiming?

3) I understand if total borrowing expenses are greater than $100, we claim it over five years. If in the second year of tax claiming the borrowing expense, the investment property became owner occupied, and the owner occupier property became an investment property, how would this affect the borrowing expense tax claiming?





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CaroATO(Community Support)Community Support
14 Sept 2022

Hi @LeoS,


If you refinanced 2 separate loans, you can only claim borrowing expenses related to the investment property. If the bank charged you one amount, you'll need to apportion the borrowing expenses accordingly. Borrowing expenses over $100 can be claimed over 5yrs or the duration of the loan, whichever is shorter.


Once you move into your IP and rent out your PPR, you'll again need to apportion your costs as you can't claim rental expenses on a home you consider your main residence. Rental expenses, including borrowing expenses, can only be claimed on the property that's used to produce assessable income.

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Most helpful reply

CaroATO(Community Support)Community Support
14 Sept 2022

Hi @LeoS,


If you refinanced 2 separate loans, you can only claim borrowing expenses related to the investment property. If the bank charged you one amount, you'll need to apportion the borrowing expenses accordingly. Borrowing expenses over $100 can be claimed over 5yrs or the duration of the loan, whichever is shorter.


Once you move into your IP and rent out your PPR, you'll again need to apportion your costs as you can't claim rental expenses on a home you consider your main residence. Rental expenses, including borrowing expenses, can only be claimed on the property that's used to produce assessable income.

LeoS(Newbie)Newbie
16 Sept 2022

Thanks Carol.


So provided I reapportion the borrowing expenses to the property that becomes an investment, am I allowed to continue claim a tax deduction for the borrowing expenses after moving out?


How do we calculate how much to apportion the borrowing expenses? Is it based on loan principal at time of refinance or property cost?

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How to allocate borrowing expenses? | ATO Community