What are peoples take on the following?
Got a lot of equity built up in existing properties and looking at buying another.
The property offer is for $320000. Want to borrow $380000 to cover costs and to pay down other non deductible debt.
Later……………
If you think you can you can, if you think you can’t you can’t.
My position is that the part of the new loan used to pay down the non deductible debt will remain non deductible. I would strongly recommend using a split facility to show the two seperate portions quite clearly.
Will make your life easier come tax time.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
The ATO is pretty clear about whether interest on borrowings is tax deductible or not.
You need to answer if the ‘intent’ of the loan is to fund the purchase of an asset that produces or is likely to produce a reasonable amount of taxable income in the future. If the answer is no, the interets on the loan is non-tax deductible, regardless if you are borrowing against IP’s or mixing the amount in with loans that are.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I agree with the others, but it still could be a good idea to do if your other debts have larger interest rates.
Terryw
Discover Home Loans
Mortgage Broker
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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