All Topics / The Treasure Chest / Interest on IP tax deductible?

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  • Profile photo of mikeejmikeej
    Member
    @mikeej
    Join Date: 2003
    Post Count: 25

    I heard somewhere that interest on an IP loan is tax deductible. Could someone explain this in a bit more detail. how does it work if you have a negative geared property?

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Mike,

    Well in a nutshell, all the expenses of owning the property inc interest are tax deductable.

    The rent you receive is taxed.

    Basically if it makes a profit then you pay tax on that profit and if you make a loss then it is deductable.

    This has been simplified a lot but I guess it answers your question.

    Cheers,

    Simon Macks
    Mortgage Hunter
    [email protected]
    0425 228 985

    Profile photo of TeacherK6TeacherK6
    Member
    @teacherk6
    Join Date: 2003
    Post Count: 164

    Yup ur rite

    interest on an IP is tax deductable, so is pretty much all other expenses, in terms of maintenence and upkeep. travelling, phone calls, stationary, agent management fees, insurance, advertising… whatever comes out of your pocket is tax deductable, but i think larger items like the replacement of part of a fence, or a Hot water service are broken down into yearly installments over a few years.. this includes stamp duty (cant remember if its the loan or the purchase stamp duty) thats also deductable over a few years….

    get a free booklet from the ATO sent to you, speak to an accountant :)

    thats why interest only loans are available i guess,,, interest on investments is commonly referred to as “good debt”

    All the best :)

    Jason

    Profile photo of DavidCDavidC
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    @davidc
    Join Date: 2003
    Post Count: 23

    Stamp duty on loans is deductable (generally) over 5 years.

    Stamp duty on purchase on property is not tax deductable, rather it forms part of the cost base of your asset (for CGT purposes).

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