Line of credit financing IP's

[bigiron]

Gday all. I'm new so go easy. I'm aware of the tax ruling about not being able to capitalise your interest on investment properties, but does anyone know about the legality of using your line of credit sub-account to pay interest costs on your IP (whilst allowing all rent, depreciation benefits etc to pay off your PPOR loan). Sounds almost the same, as the line of credit subaccount is building allowing a larger tax deduction. Any advise / help would be appreciated.

[DavidMc]

From what I've deduced I think in general no, as you would be seen to be artificially increasing the size of your deduction. However I'm no accountant, etc.

You may wish to follow our discussion here http://www.somersoft.com/forums/showthread.php?p=169376#post169376

[Rolf Latham]

Hiya

Im no bean counter but id say you can do that for the simple reason that I can do it with my business when I have to. S51 1 of the tax act I think works in the same way.

ta

rolf

[Peter 14.7]

You can capitalise rate and other costs I heard? IF you want?

Peter 147

[DavidMc]

That said, I've also heard from others it's OK. Best chat with your accountant.