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 ?
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
[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.
I would seek good advice from a good accountant on this one
Harley
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 They said it was ok, however a few days after this was issued it was withdrawn.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
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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