Jake is an accountant who migrated to Australia three years ago. As part of establishing himself in Australia, he intends to invest in the property market. As Jake is not familiar with the Australian property market, he engaged the assistance of a property broker to assist with finding a suitable investment property. The broker charged an upfront fee of $5,000. Six months later, the broker located a vacant block of land and suggested that Jake develop three townhouses on it. The cost of the land ($1 million) and estimated development costs ($900,000) exceeded Jake's budget and so he decided to undertake the venture with a business partner. The agreement with the business partner was that Jake would purchase the land and the partner would incur all development costs. The profits from the eventual sale of the townhouses, expected to be in 18 months, would be split equally between Jake and the partner. Jake established a $1 million line of credit facility with his bank which would enable him to access the required funds as necessary. The interest rate on the facility was 8.5% per annum and Jake provided the title to the land as security for the funds.

Required: Advise Jake as to the deductibility of the property broker's fee and bank interest charges.