Accounting query re LOC

[Harriet]

Hello,

I have a Line of Credit that is attached to my PPOR.

A few years ago, I purchased an IP, with 20% of the purchase price coming from that LOC (to avoid mortgage insurance).

I have decided to move into the IP, and rent out the PPOR. It will still be classified as my PPOR.

Whilst living in the IP, can I claim as a tax deduction the interest paid on the LOC? (Given the property that I originally used the money for is not actually producing income.)

Hope that makes sense.

 

[CosmicTrevor]

One of the regular SS professionals will be able to give you a better informed answer.

You need to consider the deductibility of the LOC interest and the separate loan to fund the remaining 80% for the IP. I think the deductibility of both would be at risk if you then decide to live in it.

Also, if there is no loan against the original PPOR you won't have deductions for interest once it starts generating income.

You need to get with an accountant!
Trev

 

[Terry_w]

This is a tax question rather than an accounting one.

No deduction would be allowable for he LOC or the main loan as Trevor suggested because none of the borrowings is associated with the production of income.