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Re: Expenses I can claim

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Hi,

We bought an off the plan investment property and were charged the fees stated below.

What I would like to know is whether we could claim any of these expenses on our tax?

 

Land title search fee

Mortgage Lodgement fee

Transfer lodgement fee

Release of mortgage fee 

Settlement fee

Land transfer duty

 

Thank you very much!

 

 

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Devotee

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You can claim "Borrowing Costs over 5 years.

These are costs associated with "Borrowing" the money

 

Land title search fee - Yes

Mortgage Lodgement fee - Yes

Transfer lodgement fee - Not sure what it is...

Release of mortgage fee - Not for existing personal loans 

Settlement fee - Yes

Land transfer duty - No, nothing to do with getting the money.

 

Anything that has to do with the land and not the money is a capital expense and will be used to reduce capital gains when you come to sell the property.

 

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Devotee

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You can claim "Borrowing Costs over 5 years.

These are costs associated with "Borrowing" the money

 

Land title search fee - Yes

Mortgage Lodgement fee - Yes

Transfer lodgement fee - Not sure what it is...

Release of mortgage fee - Not for existing personal loans 

Settlement fee - Yes

Land transfer duty - No, nothing to do with getting the money.

 

Anything that has to do with the land and not the money is a capital expense and will be used to reduce capital gains when you come to sell the property.

 

Dynamo

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I don’t agree entirely with macfanboy, as in some cases loshinif has not given enough information to provide an answer.

 

As to the land title search fee, insufficient information to answer.  It depends who did the search and for what purpose.  If the lender did the search and has passed the cost on to you, then yes (because, as macfanboy says, it is a cost to you relating to your borrowing the money from the lender).  However if you or your agent did the search (as I’m sure you will have done as part of the purchase) then no, it will be a capital expense (second element of cost base when you come to pay CGT).

Mortgage Lodgement Fee – Yes, agree, borrowing cost (assuming that the borrowing is only to pay for the property and not other private expenses)

Transfer Lodgement Fee – macfanboy does not address this one.  No.  This is (I assume, you don’t say what State you’re in) the fee charged by the relevant land agency to register the Transfer of Land.  Thus it relates to you acquiring the land from the seller, not borrowing the money from the lender, and is a capital expense (second element of cost base when you come to pay CGT).

Release of mortgage fee – insufficient information to answer.  Whose mortgage is being released and over what property and what was the money lent used for?  If this is a “mortgage discharge expense” for a mortgage relating to loans to buy the property, it may be immediately deductible in its own right (rather than over 5 years as a borrowing expense).  But unsure why you would be paying such a fee at this early stage.  Is this some earlier mortgage?

Settlement Fee – insufficient information to answer.  Who is charging you the fee?  If it is a lender’s fee, then yes it’s a borrowing cost.  If it’s your own conveyancer’s fee, then it’s a capital cost (again CB2).

Land transfer duty – macfanboy correct with this one.  For the same reason as transfer lodgement fee this is a capital expense (second element of cost base when you come to pay CGT).

 

Loshinif you should definitely get hold of the ATO’s publication Rental Properties 2019 and read it if you have a rental property and don’t use an accountant.  Google “ATO rental properties 2019”.

 

 

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