http://www.theage.com.au/business/p...es-interest-20120424-1xjbv.html#ixzz1szzbp8iK
A NEW tax ruling sounds a warning to some of Australia's 1.5 million property investors and may cost them thousands of dollars in tax breaks, experts say.
The Australian Taxation Office has flagged it will crack down on property investors claiming deductions for interest expenses on certain types of loan arrangements.
Property owners using some or all of the rental income from an investment property to pay off their own home loan while adding the interest from the investment loan to the principal and claiming it as a deduction would come under scrutiny, accountants BDO said.
In a determination last month, the ATO said it would reject such arrangements.
''People are trying to divert all the rental income off into their home loan.
That's pushing it too far and that's what the Tax Office is getting at,'' said Age columnist and tax expert Max Newnham.