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Is Fixed Rate Lock-In fee deductible?

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I wonder if anyone can confirm if the Fixed Rate Lock-In fee charged by the bank in acquiring a fixed investment loan deductible? Would it be claimed under borrowing expenses and the deduction is apportioned over the next 5 years? This cost is incurred when I refinance my existing investment loan which is used to fund a residential investment property which generates regular income and the investment property is managed by a professional real estate agent.

 

Below is the borrowing expenses claim info given by ATO: 

If your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, whichever is less.

If the total borrowing expenses are $100 or less, you can claim a full deduction in the income year they are incurred.

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Hi @evang79,


Welcome to our Community!  Thanks for your question.  As a fixed rate lock in fee is a borrowing expense, you can claim this deduction, provided that the entire borrowing expenses used to produce rental income.  The amount of the borrowing expenses will determine if this is spread over the term of the loan or if you can claim the full deduction in the year the income incurred.


I hope this helps, JodieM
 

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Newbie

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Thanks @JodieM, appreciate your update and confirmation. Thank you.

Best answer

ATO Certified

Community Support

Replies 1

Hi @evang79,


Welcome to our Community!  Thanks for your question.  As a fixed rate lock in fee is a borrowing expense, you can claim this deduction, provided that the entire borrowing expenses used to produce rental income.  The amount of the borrowing expenses will determine if this is spread over the term of the loan or if you can claim the full deduction in the year the income incurred.


I hope this helps, JodieM
 

Newbie

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Thanks @JodieM, appreciate your update and confirmation. Thank you.

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