All Topics / Help Needed! / TAX DEDUCTIBLE ?

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  • Profile photo of shaun0011shaun0011
    Member
    @shaun0011
    Join Date: 2006
    Post Count: 11

    Hi,
    A few years ago I purchased a unit in Cairns my loan for the unit was 156k . I lived there for about 18 months and paid down the loan by roughly 22k leaving 134k owing . I have since moved out and have been renting out the unit. About a month ago i changed my loan from a interest only to a line of credit and now when the interest payment is due the bank takes the payment out of the 22k so over time my loan will be back up to the original amount of 156k .

    What i want to find out is will I be able to claim the extra interest incurred because my ip loan is now increasing back up to to original amount and because the 22k I paid into the loan is now being used for repaying an IP it should be tax deductible right ?

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    No

    Interest paid on interest capitalised to the account is not normally deductible.

    This is a murky area and I would suggest you tread carefully if you do decide to claim it.

    Simon Macks
    Residential and Commercial Finance Broker
    simon@mortgagehunter.com.au
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of Harley2Harley2
    Member
    @harley2
    Join Date: 2005
    Post Count: 32

    I would seek good advice from a good accountant on this one

    Harley

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    The ATO put out a tax ruling in Dec last year regarding the capitalising of interest. They said it was ok, however a few days after this was issued it was withdrawn. I am not sure if they have reissued it or not.

    Terryw
    Discover Home Loans
    Terry@discoverhomeloans.com.au
    Send an email to get my newsletter.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 4 posts - 1 through 4 (of 4 total)

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