Hi Guys,
Hopefully a simple one –
I borrow funds to invest eg say a line of credit from my PPOR
The investment is made but in my wife's name rather than my own – say shares, property etc
Can i still claim a tax deduction on my return or does the deductiblity get lost because the investment is made in my partners name?
Hi Stu,
So the PPOR is in your name and you are effectively borrowing the funds against your PPOR and providing this as a 'gift' if you will, to your wife who has the title on the IP in her name? If yes, then only the people who are the title are able to claim just the portion of the borrowed funds against the taxable income.
If you are on the title of the IP then yes you can claim the portion of which you are on the title. If not then you cannot claim this.
Remember that it is the purpose of the loan that determine the tax deductibility.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
ah i see thanks for clarifying i thought that may be the case but hoped there might have been some leniency due to the spouse relationship. The purpose of the loan is still an investment it would have just been done in my wife's name as she happened to be on the lower MTR.
Why is the investment in your wife's name if (I am assuming) you are on the higher TR?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Yeah that was the plan. Wife working part time with low income makes sense to invest in her name but not if the deductibility aspect is lost.
At the very minimum you can have the title under 50/50 split so that way you can claim at least half of the negative gearing against your TR. I would go to the extend of saying that it would make more send to have it just in your name so you can claim 100% negative gearing…
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Apologises for hijacking this thread
My Ques is similar to the one posted by stu82. I have a line of credit on my IP which is under joint name. My and wife's share in the IP is 99/1%. If I borrow from LOC to invest in Shares under her name, Will the interest on the loc be claimed in the same percentage (99/1) or My wife can claim fully as Shares are under her name only. Please advise. ThanksTheFinanceShop wrote:Hi Stu,So the PPOR is in your name and you are effectively borrowing the funds against your PPOR and providing this as a 'gift' if you will, to your wife who has the title on the IP in her name? If yes, then only the people who are the title are able to claim just the portion of the borrowed funds against the taxable income.
If you are on the title of the IP then yes you can claim the portion of which you are on the title. If not then you cannot claim this.
Remember that it is the purpose of the loan that determine the tax deductibility.
Regards
Shahin
Shahin, this is not correct.
Firstly if money was borrow to gift to someone then no interest would be deductible at all.
The security of the loan does not matter so whose name is on title for the PPOR is not reallyy relevant.
If the house is in the husband's name be he has a LOC set up in his name and this money is on lent to the wife and the wife invests it then the wife will usually be able to claim the interest.
This is because it is really treated as an on lend with the wife paying the husband interest and the husband claiming the interest he pays as a deduction. Net result is the deduction is in the hands of the wife.
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
amsaini15 wrote:Apologises for hijacking this thread My Ques is similar to the one posted by stu82. I have a line of credit on my IP which is under joint name. My and wife's share in the IP is 99/1%. If I borrow from LOC to invest in Shares under her name, Will the interest on the loc be claimed in the same percentage (99/1) or My wife can claim fully as Shares are under her name only. Please advise. ThanksWife could claim fully if the money borrowed is used by her to invest in shares (that are income producing)
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
Thanks for clarifying Terry I spoke to some people away from this site and that was a similar answer to what i received. I believe something needs to be formally drawn up though to confirm the on lend that is taking place.
To make matters simple i am just going to end up going with the traditional Inv loan in my name and claim the deduction in my name while being on the higher MTR.
Its simpler and the deduction wont be all that beneficial if the net result is that my wife receives it on a low income anyway.
My Ques is similar to the one posted by stu82. I have a line of credit on my IP which is under joint name. My and wife's share in the IP is 99/1%. If I borrow from LOC to invest in Shares under her name, Will the interest on the loc be claimed in the same percentage (99/1) or My wife can claim fully as Shares are under her name only. Please advise. Thanks
You must be logged in to reply to this topic. If you don't have an account, you can register here.
