Is your mortgage structured for maximum tax deductions?

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April 8, 2011

Be aware of these simple rules when negotiating your investment home loan.

  • In order for you to claim deductions, your investment property must produce income.
  • Don’t give your financial institution unsupervised power when it comes to structuring your mortgage. Any mistake they make resulting in lost tax deductions will be left for you to sort out with ATO.
  • You can start claiming from the day your property is vacant for rent. Up until then, may only claim interest, rates and insurance.
  • From the outset, make it clear to your lender that you are not interested in a loan that is not structured for maximum tax benefit.
  • If you redraw on your loan, that money is only tax deductible if you use it to generate income.
  • If you transfer money from an investment property loan into a personal account, it will be deemed as personal funds and become ineligible for any tax deductions.
  • Costs which are not tax deductible include those associated with buying and selling your property such as conveyancing, advertising, agent’s commission, legal fees and stamp duty.
  • If you are borrowing the deposit for your investment property, ensure your lender pays the money into your existing loan. Then redraw on your mortgage to pay the new deposit.
  • Mortgage calculators can help you calculate your tax deductions


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