As long as it is not a contrived scheme to gain a tax benefit..

[dwv]

I got this from bantacs.com.au
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Capitalised interest is deductible

Hart’s case would not have had to resort to Part IVA if it wasn’t. If you can’t afford to make the interest payments on your rental property, borrow to pay it then the interest on that loan is deducible as well. As long as it is not a contrived scheme to gain a tax benefit ie you have a genuine reason for not being able to pay the interest.

Please seek advice on your particular circumstances before acting on this information.
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Been reading a lot about capitalised interest and been thinking of getting a LOC. But, as stated above, if I can service my IP with the rental income and salary I currently receive then I SHOULD (???) pay interest and expenses with my earnings as paying via a LOC will be seen as a "contrived scheme to gain a tax benefit." Could somebody confirm this, please?

 

[Ausprop]

would seem that any other course of action could easily be argued as contrived.

 

[bort]

you'd have to look up the ATO definition of contrived to say that .. and then the case law to confirm the interpretation of the definition

 

[ggumpshots]

If you want to have a margin of safety , ie cash in the bank then , you very well may not be able to afford the interest payments .

In that case I think capitalising interst would seem sensible.

Nobody puts all their money into investments . Everybody has cash in hand in some form, for repairs , emergancies or for the sacking which may occur in th efutre.
Food for thought