Tax Implication Of Refinancing

When refinancing an investment property, the costs involved in setting up a loan and exiting that loan may be tax deductible.

Refinancing Costs / Tax Deductible

When you refinance your investment property, you can claim two main areas of tax deductions;

• The start-up costs of borrowing include loan application fees, legal fees, lenders mortgage insurance, refinancing stamp duty and loan registration costs.
• The buyer may have to pay exit fees and penalties.
• Note that you may not receive the refund for these costs immediately. Budget accordingly, as it could take a long time to be returned to you.

Borrowing costs can be claimed on tax over the first five years of property ownership. However, if you sell or refinance within those five years, you should be able to claim the remaining tax deductions immediately .

Tax Return Information

In order to claim tax deductions for bank fees, it is necessary to maintain records and documentation of all bank statements and receipts. Your bank will be able to provide you with a statement of costs, which outlines your refinancing fees for tax purposes.

As part of maximising your tax return, speak to a tax professional who can help you with any paperwork you may need.

If you’re thinking about refinancing your home loan, talk to a My LMI Group broker who can help you find the right loan.