Can someone please answer this question for me,If i build a house for an investment property are my repayments a tax deduction on the intrest i will pay during construction?
No they are not. It is only deductable against income (rent). so if it's not available for rent there is no tax deduction. Sorry.
Are you sure catalyst ?? We are just about to commence construction on our investment property, and i was under the impression that the interest charged during construction was a tax deductible expense. My accountant never said otherwise when i was asking about my tax variation application for it. Can any accountants clarify please ??!!!!!!!
Yes it is…
Exert from ATO
“Similarly, if you take out a loan to purchase land on which to build a rental property or to finance renovations to a property you intend to rent out, the interest on the loan will be deductible from the time you took the loan out. However, if your intention changes, for example, you decide to use the property for private purposes and you no longer use it to produce rent or other income, you cannot claim the interest after your intention changes.”see this link…
http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00270214.htm&page=9#P251_26597Thanks heaps Josh!!!
Hi,
The test for deductibility of interest is the use to which the borrowed funds are put. If put towards the acquisition of an IP that will generate taxable rent then the interest will be deductible.
Watch for a change in intention as noted above. Eg. if there is a change of intention to sell on completion rather than rent the status of the interest may/will change and there are a whole range of other tax and GST issues to deal with.
Note – if you can't deduct the interest it will form part of the cost and will be taken into consideration when calculating the profit on sale.
Absolutely it is as long as you have in intention of renting the property out for investment!
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