The investment property fees you can write off on tax
If you own a rental property, you can claim a deduction for any borrowing expenses that you incurred in arranging finance to purchase it.
These are costs (over and above the normal tax-deductible interest on the loan), such as:
- Loan establishment fees
- Lenders mortgage insurance (insurance taken out by the lender and billed to you)
- Title search fees charged by your lender
- Costs for preparing and filing mortgage documents (including legal fees)
- Mortgage broker fees
- Fees for a valuation required for loan approval and
- Stamp duty charged on the mortgage.
If your borrowing expenses are $100 or less, you can claim the full amount in the income year you incur the expense.
Where your total borrowing expenses are more than $100, you spread the deduction over the shorter of either five years or the term of the loan.
If you obtained the loan part way through the income year, you need to adjust your claim according to the number of days in the year you had it.
You can claim a deduction for the balance of the borrowing expenses in the final year of repayment if you either repay sooner than the term of the loan or repay it in less than five years.
There are a number of expenses that can't be deducted, including:
- stamp duty on the transfer of the property title (unless you live in the ACT, where it is deductible) - this is added to the capital gains tax cost base of the property
- life insurance premiums associated with the loan and
- borrowing expenses where the loan is taken out for private purposes (for example, it is used to purchase your family home).
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