Deductibility of break fees

Karen asks:
(updated on Friday, May 26th 2017)

Are mortgage break fees on the sale of a rental property deductible?

Our Experts Answer:

Yes, mortgage break fees are deductible - even when the property is being sold - but the timing of the deduction can differ.

If the financial arrangement is terminated - ie: the loan is repaid or refinanced - the fee is deductible when incurred. But if the financial arrangement continues - eg: a fixed rate is broken but the loan is not repaid - the break fee must be amortised over the remaining term of the loan.

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