Borrowing for renovation

[Pins]

Is there any tax advantage to borrowing for renovation? Understanding renovation expenses for capital improvements are not tax deductible but wondering if there are any other benefits like depreciating borrowing costs

 

[Terry_w]

Is there any tax advantage to borrowing for renovation? Understanding renovation expenses for capital improvements are not tax deductible but wondering if there are any other benefits like depreciating borrowing costs

Yes. Borrowing for investing means you have more free cash to pay down non deductible debt.

 

[Paul@PFI]

Is there any tax advantage to borrowing for renovation? Understanding renovation expenses for capital improvements are not tax deductible but wondering if there are any other benefits like depreciating borrowing costs

If the property is intended to be income producing the loan interest is deductible if the borrowed funds are used for capital expenditure (ie acquisition or improvement). Sure the capex isn't deductible but the interest is.

Depreciation at a higher value may also follow, For demo of the existing structure if it was previously income producing then the former asset may also be scrapped.