Interest expenses | 2023 Gotax

All you need to know about Interest expenses and your rental Property

When it comes to claiming a tax deduction for interest on loans used to purchase a rental property or to finance renovations or repairs, the property must be rented or genuinely available for rent in the income year you are claiming a deduction for the interest expenses. This means that if you have taken out a loan to purchase a rental property, you can claim a deduction for the interest charged on that loan.

In addition to interest expenses, you may also be able to claim a deduction for borrowing costs. Borrowing costs are expenses you incur to take out a loan to buy property. They are tax deductible if the borrowed money is used to produce assessable income. If the borrowing expenses are $100 or less, they are fully deductible in the year you incur them. If they are more than $100, they are deductible over the term of the loan or five years, whichever is shorter.

Borrowing expenses you can claim include loan establishment fees, lender’s mortgage insurance, title search fees charged by your lender, costs for preparing and filing mortgage documents (including solicitors’ fees), mortgage broker fees, and stamp duty charged on the mortgage.

It’s important to carefully review your settlement statement and consult with a tax professional or visit gotax.com.au to determine which costs are tax deductible for you. They will be able to provide you with specific advice based on your individual circumstances.

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