At Mount Martha Accountants one of the things we do a lot of work with is Rental Properties, when we have new clients come to us we quite often pick up expenses that you (and your old Accountant) have missed or might not be aware of. Once of these is what the ATO calls borrowing costs;
When you buy a property to rent out there are often costs when you first buy the property things like;
- Loan Establishment Fees
- Title Search Fees
- Costs of Preparing and Filing Mortgage Documents
- Stamp Duty on your Mortgage
- Valuation Fees
- Mortgage Broker Fees
- Lenders Mortgage Insurance
These are all Borrowing Costs that are deductible.
There are also some other initial upfront costs – thinks like
- Stamp Duty on the property itself
- Insurance on your life (to pay out the mortgage of you were to die)
- Lawyers or Conveyancers fees
These are not Borrowing expenses
For expenses which are borrowing expenses you can claim these over a 5 year period. The ATO wants you to apportion them on a straight line basis so for example if you buy your property on June 1st 2020 you would claim only 30 days of expenses on your 2020 tax return not a full years worth.
If you want us to review your last few tax returns to make sure you have claimed your borrowing expenses accurately we can do that at no cost and can generally amend your last 4 years of tax returns if you have made a mistake.
Please contact our Property Accountants Here
You can read more about the laws around Rental Properties on the ATO site here.