Borrowing Expenses
Deductible over the period of the loan where the loan is less than five years.
Otherwise deductible over five years. Expenses deductible include:
o Loan Application fee
o Lenders legal fees
o Title search fees
o Lenders mortgage insurance
o Stamp duty on mortgage
o Mortgage registration fees
Depreciation on Plant & Equipment
The ATO calls it Decline in Value of depreciating assets.
Depreciation on the building construction
The ATO calls it Capital Works deduction.
Cost of installing any plant & equipment
Hot Water Systems for example are considered part of the cost of system and is to be depreciated.
Set of assets
A dining table and 6 chairs for example is to be depreciated in accordance with their effective life. Each item cannot be separately deducted for being under $300.
DEDUCTIBLE Expenses – OVER a NUMBER of YEARS
The following items are either not deductible or considered to be of a capital or private nature by the ATO.
On Acquisition of Rental property
o Purchase price
o Stamp duty on purchase
o Legal/conveyancing fees
o Title search fees
o Pest & Property inspection
o Sourcing Fee
o Renovations immediately after purchase
o Repairs immediately after purchase
On Sale of a property
o Legal/conveyancing
o Advertising
o Agent fees
Travel expenses
On 9 May 2017, the government announced that from 1 July 2017 all travel deductions relating to maintaining, collecting rent or inspecting an investment property will not be allowed.
Pre-Purchase expenses
including (especially if property was not purchased)
o Attending seminars to acquire more property
o Cost of reports on property prior to purchase
o Travel to inspect property prior to purchase
Cost of improvements or renovations can only be depreciated over 40 years at 2.5% p.a.
Where the property was not available for rent, then all the expenses described in the above deductible section are not deductible
o Particularly relevant where the property is used as your personal holiday accommodation.
o Listing with an agent and rental documentation helps prove
its rental availability
What is NOT deductible?