Capitalised Interest

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Still in School
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@still-in-school
Join Date: 2003
Post Count: 1,844
March 30, 2004 - 7:18 am
Hi Guys,
is it possible to capitalise the interest on an investment property?
or
can you only do that when moving from your PPOR into your new PPOR?
Cheers,
sis
People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million
melbear
Member
@melbear
Join Date: 2003
Post Count: 2,429
March 30, 2004 - 7:19 am
Hey SIS
Yep it is. Some ways are acceptable by the ATO, and some aren’t, so you’ve got to be very careful how you do it if you wish to claim the capitalised interest as a tax deduction.
Cheers
Mel
Still in School
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@still-in-school
Join Date: 2003
Post Count: 1,844
March 30, 2004 - 7:22 am
Hey Mel,
so for example, if you were to purchase an IP and decide that instead of paying the full interest, you would let the interest capitatlise…
…is that perfectly fine to do?
Cheers,
sis
People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million
woodsman
Member
@woodsman
Join Date: 2004
Post Count: 714
March 30, 2004 - 7:26 am
SIS,
I believe there is a case in the Federal Court which is still determining the validity of whether you can claim the capitalised interest. The waters are still murky.
James
Rubbachook
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@rubbachook
Join Date: 2003
Post Count: 288
March 30, 2004 - 8:21 am
This is being tested in court. Two things make this risky in my mind:
1. You fall further and further behind in a flat market
2. It has not been heavily promoted by major financial institutions in an extremely aggressive credit environment. That this has been avoided by the majors has to be indicative of it’s longevity as a strategy, in my mind.