Private ruling: Rental property expenses
Published: September 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and answer | Are the fees associated with refinancing a loan deductible? | Yes.

Relevant facts and circumstances: You have a rental property. You refinanced the loan on the rental property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 25-25.

Reasons for decision: Summary: Borrowing expenses are expenses directly incurred in taking out a loan for a rental property and are deductible under section 25-25 of the Income Tax Assessment Act 1997 . Allowable borrowing expenses may include loan establishment fees, title search fees and costs for preparing and filing mortgage documents including mortgage broker fees and stamp duty charged on the mortgage. The costs associated with refinancing a loan are also included. 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 you repay a loan early and in less than five years, you can claim a deduction for the balance of the borrowing expenses in the year of repayment. If you obtained the loan part way through the income year, the deduction for the first year will be apportioned according to the number of days in the year that you had the loan. In your case, you have refinanced your loan and incurred fees. These expenses are deductible under section 25-25 of the Income Tax Assessment Act 1997 .

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