purchasing costs – which are tax deductible?

Hi,
Mortgage insurance, Bank fees, stamp duty on mortgage
are classified as borrowing expenses, and iare tax deductible
over five years. Insurance, Council & water rates (you will have to
pay at settlement) are tax deductible.
Building, pest inspection and conveyancing expenses are part
of the capital cost. If you buy an investment property better to get a depreciation report too which cost around $300. That is tax deductible.

Cheers
alto

Stamp duty is tax deductible too, but only taken into account when the property is sold – except in the ACT where it can be claimed straight away apparently.

Terryw,

Where did you get this information? I would like to look this up.
I thought the income tax law works the same way in all States.

Alto55

Hi Readleaves,

You can download a “Property Purchase Budget Planner” template for free off http://www.propertydivas.com.au if you’re looking at purchasing a property soon.

Borrowing expenses such as LMI, stamp duty on a mortage, application fees and bank charges are all tax deductible over a period of 5 years assuming it is going to be rented.

For upfront costs such as building and pest inspection these will be added to the cost base of the property, along with property stamp duty and legals, so you can’t claim them upfront, but they do reduce your capital gains tax when you sell later on.

Building insurance & rates will be tax deductible only from when the property becomes available for rent.

Not sure about the stamp duty in ACT, but Terry is correct in saying the houses there are all 99year leasehold, so I’d suggest you investigate this further if you live in ACT.

Hope this makes it clearer.

Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”