All Topics / Finance / Tax Deductibility Question
Hi Everyone. This is my first post here. I just joined as I have just rented out my house that I used to live in and it looks like a great site.
Anyway I am in the process of amending my home loan to an investment loan and making it interest only but have a question about how much of the loan will be tax deductible. Firstly when I purchased the house in 2008, the loan balance was approx $240K. Earlier this year I had a divorce settlement and had to pay my ex $46K, which was debited to the loan upon settlement which made the loan balance $286K and a new loan was drawndown as the original loan was in joint names.
Finally I needed to redraw another $12K for debit consolidation bringing the loan balance to $298K which is where it is now.
So I understand that the $12K is definitely not deductible but was hoping that the $46K payment to the ex wife was as It was a payment for her share of the house. Does anyone have any thoughts? A guy at HR Block thought it should be.
Also, is it ok to have just the one loan and just work out the interest deductibility by a percentage method or do I need to have two loans? One for investment and one for the non-deductible amount.
Sorry if this sounds long winded but was hoping I could get some advice on this.
Thanks
Neil
Neil,Y
ou shoud see a professional. You need to work out the deductibile portion and then you should split the loan. Take the terms of your settlement with you. This is likely to be considered a private expense, but depends.
Taking tax advise from a guy a HR is like taking nutrition advice from a staff member of McDonalds.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Nice analogy as always
Which city are you in Neil, you need to speak to a good accountant.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Why is it HR block have such a bad name? Everyone I talk to say they’re no good.
Hi Joe
Nothing wrong with H & R Block for your ma & pa PAYG Tax return but for something that needs a more complex answer i would suggest a specialist.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw wrote:Taking tax advise from a guy a HR is like taking nutrition advice from a staff member of McDonalds.I wouldn't quite put it like that, at least H&R do tax work but Mickey D's don't do dietary/nutrition.
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