Fixed Interest Loans - Exiting Early

Posted: 28th March 2011

Inland Revenue has issued a Public ruling regarding the Deductibility of Loan Break Fees Paid by Landlords.

 The ruling states refers someone that has purchased a property from which rental income is derived, with a fixed interest rate loan.

 If that person subsequently pays a break fee to the lender to repay in full and terminate that loan earlier in order to sell the rental property, a base price adjustment is required in the income year the loan is repaid. 

 In short this means that the break fee will be a deductible expense.

Should you have any queries regarding the above, please do not hesitate to contact Sudhir Lala on 09 308 4055 or sudhir.lala@tbag.co.nz