Can you claim interest as a deduction on a deposit

Viewing 6 posts - 1 through 6 (of 6 total)

cs_rlewis
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@cs_rlewis
Join Date: 2010
Post Count: 53
March 19, 2013 - 2:43 pm
Hello to all the property people.
my question today is can u claim interest u pay on a deposit as a tax deduction.
for eg, if u need to pay $34k as a deposit for an off the plan apartment u intend to buy as an investment property, can u claim the interest paid as a tax deduction whilst the apartments are being built?
Jamie Moore
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@jamie-m
Join Date: 2010
Post Count: 5,069
March 19, 2013 - 8:22 pm
I'm not an accountant and would always suggest that you seek professional advice. I would have thought you could claim the interest given the purpose.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Derek
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@derek
Join Date: 2004
Post Count: 3,544
March 19, 2013 - 11:01 pm
Agree with Jamie – assume the funds are borrowed from line of credit or similar.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 20, 2013 - 11:29 am
Interest on money borrowed to invest is generally deductible, but this will also depend on how the transaction was structured.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Btonthemove
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@btonthemove
Join Date: 2013
Post Count: 1
May 2, 2013 - 2:58 am
Hi,
I have exactly the same question, just want to clarify – i can borrow the deposit and claim the interest charges on that deposit against my annual tax? Is there any special structure you are talking about as the bank doesn't assign the property against the loan for the deposit. My accountant gave me a response that just confused me – something about capitalization when the property is built and can be rented. All I really want to know is, should I borrow the deposit or use my savings for the deposit for an investment property off the plan. Yes or no answer was what I was after…
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 2, 2013 - 4:31 am
Hi and welcome aboard.
Deductibility is determined by purpose – not what the debt is securing.
If you have taken out a loan for the purpose of investing in property then it should be deductible. That loan needs to be set up as a stand alone facility and not mixed up with your owner occupied loan.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone Me
Mortgage Broker assisting clients Australia wide Email: [email protected]