A question about interest on a LOC loan under two names

[Martin_2F]

Dear all

I have a question regarding owning a LOC under two names and investing it just under one name.

Consider the following scenario:

My wife and I have a LOC loan under both our names. If we use the money from that loan to buy IPs or shares (whatever income generating assets) just under one name (for example, an IP with the title only show my wife's name). Could she receive all the rent from the IP and deduct all the interest generated from the LOC that used to purchase the IP? or she can only claim half the interest deductible as the LOC is under two names?

 

[Rolf Latham]

Hiya Martin


Id say the title will determine deductability......................but im not a tax guy

ta
rolf

 

[babushka]

Hi Martin

Your situation is the same as ours. Although we have a joint name LOC -because it is secured by our PPOR (in joint name) - we use LOC to invest in my name only. Our accountant said I would be entitled to full interest deduction, we would not have to split the interest because it is the purpose of the LOC money used to generate income by me. Of course I have to declare all the income from the investment in order to claim the interest deduction.

Other forumites may like to confirm this from their own situation.

 

[Martin_2F]

Thank you! babushka and Rolf Latham. Your information is very helpful to me!