Pay A Home Loan Out Early
2009
Are Loan Break Costs Deductible?
Are you thinking of selling your rental property to take advantage of the first home owner property bubble? Do you have a fixed rate loan?
If you are going to break a fixed interest loan agreement to sell a rental property, you should be able to claim the penalty interest as an outright tax deduction. This is because the penalty interest is a discharge cost and specifically allowed by the tax office. You must have received rental income in the year of your claim or it will not be an immediate deduction. The penalty interest and fees will be added to the cost base of your property if you have not been getting income. You won’t miss out on a tax break either way. Ask your accountant for clarification.
Check with your lender before you consider selling your rental property. You need to know exactly what fees and penalties you are up for! Also, check your current loan statements for errors.
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