Hi Richard

Thanks for the advice. I must say I'm  quite surprised – was pretty sure the UK inland revenue didn't allow this and thought it was only for negatively geared losses over here!

So, for example, if I wanted to buy a $200K property with a 5% deposit and have a mortgage (sorry, home loan) of $190K  at 10% (for ease of calculation),  the interest of $19Kpa would be deductable from my 45% tax rate leaving me with $10450 to pay? (The rental return then being added back to my income and taxed accordingly).

Would the deposit also be tax deductable if I take it from my PPOR offset for the specific purpose of investing?

Cheers

MM