All Topics / Help Needed! / Tax deductible deposit?
Hi gang,
Well i have located my first IP in WA and have it under contract with a 2 mth settlement. I am trying to best arrange funds for the deposit from a mix of cash, selling some shares and “personal” line of credit (car and some other stuff). At the moment I owe about 30k on the LOC and I’m thinking that if i pay it off in full using other cash, then redraw it to pay the deposit, as the IP is an income producing investment that portion of the deposit would be deductible right?
Thanks in advance,
Q
Might want to consider a Deposit Bond if the Seller will accpet it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Gang,
In answer to your question, “yes, interest charges would be tax deductible.” But you can’t keep redrawing from it again and again as calculating which interest portion is tax deductible or not would be too complicated. Having said that though, if you using the LOC exclusively for the purposes of banking the rental income and then using it to redraw the funds to pay the home loan and the property expenses, it can be argued that it is indeed entirely for the IP.
Don’t hold me to this, see an accountant.
Angel
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