If you run your own business, your tax return is written to keep tax within the rules. A home loan application asks a different question: how much money do you really have to make repayments? Add-backs bridge that gap. Understanding them can change how much a lender may be willing to lend you.
What an add-back is
Lenders usually start with the net profit from your business tax return or financial statements. Then they look for expenses that reduced that profit on paper but won't keep reducing your cash in future. Those expenses get added back.
The logic is simple. If an expense was non-cash, one-off, or relates to a debt that's being paid out with the new loan, it doesn't affect your ability to meet repayments going forward.
Common add-backs
Every lender keeps its own list, but these come up most often:
- Depreciation. A non-cash expense. The money left your account when you bought the asset, and depreciation spreads that cost across later years on paper.
- Interest on debts being paid out. If your new loan pays out a business loan or equipment finance, the interest on that debt won't continue.
- Genuine one-off expenses. A one-time legal bill or a major repair that won't recur. Lenders usually want evidence and an explanation from your accountant.
- Extra super contributions. Some lenders may add back voluntary super contributions made above the compulsory amount, because you could choose to stop them.
- Owner's wages paid through a company. Where you pay yourself a salary from your company, lenders count that as personal income alongside the company's profit, so it isn't lost.
Why this matters for tradies
Depreciation can be a big number in trade businesses. Under the ATO's instant asset write-off, small businesses with aggregated turnover under $10 million can immediately deduct the business portion of eligible assets costing less than $20,000 each. The ATO says this $20,000 threshold is permanent from 1 July 2026. Larger assets are generally depreciated over time.
A new trailer, tools, a compressor or a set of formwork in the same year can pull taxable profit well down. That may be sensible for tax, and your accountant can advise on that side. For a loan application, the lender may add those write-offs back, which can bring your assessed income closer to what you actually earn.
An illustrative example
This example is illustrative, with round numbers. A sole trader's tax return shows:
- Net business profit: $80,000
- Depreciation and asset write-offs: $30,000
- Interest on equipment finance that the new loan will pay out: $5,000
- One-off legal fee: $5,000
If a lender accepts all three add-backs, assessed income could be $80,000 plus $40,000, or $120,000. If another lender accepts only depreciation, it would assess $110,000. If a third accepts none, it would assess $80,000. Same tax return, three different results. That's why lender choice matters for self-employed borrowers.
What lenders usually won't add back
- Ongoing costs that are part of running the business, such as fuel, wages, insurance and rent
- Interest on debts that will stay in place after the new loan
- Expenses you can't document or explain
- Repeated "one-off" costs that show up every year
Lenders also generally use more than one year's figures. If last year's income was lower, they may average the two years or use the lower year. A fall in profit needs a clear explanation.
How to help a lender accept your add-backs
Lenders need to see the add-backs in your paperwork. Here's what helps:
- Full financial statements. A profit and loss statement and balance sheet that list depreciation, interest and other expenses separately, rather than a single total.
- Tax returns that match. Lenders check the numbers line up across your returns and financials.
- An accountant's note. A short letter explaining any one-off items makes them far easier for a lender to accept.
- Loan statements. For debts being paid out, show the balance and the interest paid.
If you're planning to buy in the next year or two, talk to your accountant and your broker before you lodge. Your accountant can advise on the tax side. We can tell you how lenders may read the result.
If your returns aren't lodged yet, a low-doc loan may be an option. See our guide to low-doc loans for tradies and our self-employed home loans page. If you already have a loan and your income has grown, our refinance page may be relevant.
For most home loans there's no broker fee; any fee is disclosed upfront in our Credit Guide.
Talk it through
Send us your last two years of financials and we'll show you how different lenders may treat your add-backs. Call or text 0458 773 002, or start with the free assessment at our contact page.
Common questions
What is an add-back on a home loan application?
It's an expense in your business accounts that a lender may add back to your profit because it doesn't affect your ability to make repayments, such as depreciation.
Do all lenders accept the same add-backs?
No. Each lender has its own policy, so the same tax return can produce different assessed incomes with different lenders.
Does the instant asset write-off affect my borrowing?
It can lower your taxable profit. Some lenders may add those write-offs back as depreciation, which can lift the income they assess.
What documents support add-backs?
Full financial statements, tax returns, statements for any debts being paid out, and an accountant's letter explaining one-off items.
Sources
This guide is general information only and doesn't take into account your objectives, financial situation or needs. Talk to us about your circumstances before acting on it. Related: Self-employed loans.