Hey guys
If I was to draw on the equity in an investment property to fund expenses like new curtains, carpet etc, I would expect that the interest would be deductable, am I right?
What if the expenses were not capital in nature and depreciated over time, like repairs for example, would the interest still be deductable?
Cheers,
CarlYes.
If say you have an investment account, you can draw on expenses such as Rates, Body corporate, Insurances etc.
If you have non deductable debt, why pay these expenses out of your own pocket. The worst thing you can do in this case is allow a Property Manager to deduct these expenses from rental income.Mal
Getting out of your comfort zone, can help you become comfortable
Even better!
What’s your take on capitalising interest payments using a line of credit for an investment property? Lets say for argument’s sake that the person in question had no non deductable debt and that the rent from the property just hit the LOC as it arrived..
Originally posted by carl_vic:What’s your take on capitalising interest payments using a line of credit for an investment property? Lets say for argument’s sake that the person in question had no non deductable debt and that the rent from the property just hit the LOC as it arrived..
If this is what I am thinking, then the boat has passed on this one as the ATO has made it against the law.
CATA
Asset Protection Specialist
[email protected]Cata, I don’t beleive you are correct on the ATO passing regulation against capitalised interest deduction claims. If you are referring to the Harts versus ATO case, the judges did not rule specifically on capitalised interest as an invalid deduction. Indeed they commented under other circumstances that the interest claim would be valid, but in this particular case they found the split loan arrangement was a contrived setup specifically for taxation purposes, and thus the capitalised interest claimed through this contrived arrangement not deductable.
Tasman
I am with Tasman on this one. From my memory of reading the case, they did say that capitalisation of interest could be claimable under different circumstances.
Terryw
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