Negative Gearing amount

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propertyboy
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@propertyboy
Join Date: 2008
Post Count: 232
November 13, 2011 - 1:19 pm
I purchased a house in victoria for 745k and with stamp duty and all legal costs etc it came to 780k
When I do my tax, can I calculate the interest paid for negative gearing purposes on the whole 780k (if I took a loan to pay for everything) or only on the purchase price component of 745k? I am paying interest back on 780k.
My question is, for negative gearing purposes, can you only calculate the loan amount on the purchase price of the property even if the loan I took out was to cover all costs including stamp duty?
Scott No Mates
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@scott-no-mates
Join Date: 2005
Post Count: 3,856
November 13, 2011 - 9:08 pm
Interest can be claimable on the entire loan provided that you don’t contaminate the loan with personal borrowings eg credit card bills, new boat, holidays etc.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
November 14, 2011 - 1:40 am
propertyboy wrote:
I purchased a house in victoria for 745k and with stamp duty and all legal costs etc it came to 780k
When I do my tax, can I calculate the interest paid for negative gearing purposes on the whole 780k (if I took a loan to pay for everything) or only on the purchase price component of 745k? I am paying interest back on 780k.
My question is, for negative gearing purposes, can you only calculate the loan amount on the purchase price of the property even if the loan I took out was to cover all costs including stamp duty?
Did you borrow $780k or $745k?
You can generally claim all interest on borrowings for costs as well. But this may depend how the loan is set up.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Ryan McLean
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@ryan-mclean
Join Date: 2010
Post Count: 547
November 14, 2011 - 9:36 am
As already mentioned above. It should be fine to claim on the entire $780k, just as long as it is all for investment purposes.
Imagine if your property was a business. You would only be able to claim expenses relating to the business. You couldn't claim completely unrelated expenses. It is the same with property.
If you think that an expense needs to have the goal of making you more money, or improving your investment. Then usually that is claimable. Stamp duty is an expense that will hopefully make you more money down the track because it allows you to buy property.
Ryan McLean
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