All Topics / Legal & Accounting / Interest Deductibility

Viewing 3 posts - 1 through 3 (of 3 total)
  • Profile photo of FreenaFreena
    Participant
    @freena
    Join Date: 2011
    Post Count: 2
    June 14, 2011 - 8:13 pm

    Hi everyone,
    Long time reader with a first time post here! Hope someone can help.

    I am one of those who is in a fortunate, but unfortunate position in that I had paid off my PPOR (let's call it property 1) and now rent it out while my new PPOR (property 2) has a mortgage. Both properties are in need of renovating, which I have the funds to do but I am thinking that if I were to borrow the funds to renovate property 1, all the interest would be deductible and would offset the rent I receive. Is this a good way of doing this or would it not really save me money in the long run?

    Thanks in advance.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 14, 2011 - 11:00 pm

    Thats probably the best way. Interest on money borrowed to reno an investment property should be deductible.

    Don't use your cash to reno the investment as this will mean you have less cash for your PPOR and will result in higher non deductible interest and therefore higher tax.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of FreenaFreena
    Participant
    @freena
    Join Date: 2011
    Post Count: 2
    June 16, 2011 - 7:13 pm

    Thanks so much Terry.

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.