Question

Question 18

1. On 1 January 2020 Georgia borrowed $500,000 from the Bank of Queensland, which she used to purchase a three-bedroom rental property in Morningside. The property has been exclusively rented out to tenants. The loan was for a period of 15 years.

   On the date she took out the loan (being 1 January 2020), Georgia incurred the following expenses in relation to the loan:

   	$
   Valuation fees (valuation of property conducted by her bank)	400
   Mortgage registration fees	550
   Loan establishment fees	875 ________
   Total:	$     1,825

   As at 30 June 2020, Georgia had paid interest of $6,780 on the bank loan for the period 1 January 2020 to 30 June 2020.

   What is the TOTAL amount that Georgia can claim as a deduction for the 2020 income year?

   Note: There are 182 days from 1 January 2020 to 30 June 2020.

   Note: Please note that 2020 is a leap year. Hence, please use 366 days in your calculations.

   	a.	$856;
   	b.	$182;
   	c.	$6,962;
   	d.	$8,605.

Answer 1

As Georgia r's borrowing expenses are more than $100, he must claim them over five years from the date he took out his loan for the property. He works out his borrowing expenses' deductions as follows:
Borrowing expenses deuction = 1825 x 182/1826	$          182
Interest Expenses	$       6,780
TOTAL amount that Georgia can claim as a deduction for the 2020 income year	$       6,962