Hi all,
Can I claim the interest paid on money borrowed for non-capital items (eg,, rates)?.So if I had a LOC for the property purchase,and I used money from the LOC to pay for expenses such as rates or repairs or body corporate fees,can I claim the whole amount of interest paid on the LOC,or do I need to work out what is capital and non-capital expenditure?
Thanks,
ToolsI beleive you can claim interest on money borrowed to fund income producing activities such as property investing. So as long as the cost relates to your rental property you should be able to claim the interest.
ps I am not an accountant – but do wear glasess when typing these answers!
Terryw
Discover Home Loans
North Sydney
[email protected]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
I can confirm Terry’s advice to you. You can claim the interest incurred to buy the capital asset, and likewise you can the interest to fund necessary expenses incurred in earning the income from the asset, whether they are repairs to maintain the asset or ongoing expenses such as rates. Even funding renovations would make the interest claimable.
It took a while – like years, 15 if I remember correctly – but the Steele’s case in Australia finally settled the argument that interest expense is always on revenue account. There was never this question in New Zealand, but Australia seemed to want to decide it in the High Court.
I was a CPA accountant in Australia for six years, so I should know.
I hope that puts your mind at rest!
Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360 2180
http://www.masteraccountants.co.nzHi Tools,
I am currently doing this – using split investment LOC to pay for all IP expenses (apart from interest) instead of from ‘savings’ – and then paying the equivalent sum of money off the home loan from ‘savings’.
Needs discipline but effectively shifts non-deductible debt across to deductible debt.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
there is actually an article about this in the investors club newsletter this month.
Terryw
Discover Home Loans
North Sydney
[email protected]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
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