Hello
Borrowing costs relating to a loan for an investment property are deducted over 5 years. The loan is refinanced with another bank after 2 years. Therefore borrowing costs of 2 years have only been deducted. When the loan is refinanced with a new bank what does one do with the borrowing costs relating to the 3 years (with the old bank) that have not been deducted? Are the total borrowing costs for the 3 years deducted in the tax year that the loan is refinanced because it is seen as the loan has been repaid ie old loan repaid by the new loan / when the new loan is taken out?
As per ATO guidance: “If you repay the loan early and in less than five years from the time you took it out, you can claim a deduction for the balance of the borrowing expenses in the final year of repayment.”
Thank-you
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