Borrowing to pay a deductible loan

My read would be that capital items (renovations, etc) will be added to the cost base. Operating costs including repairs, rates and interest will be 'lost' in that they are neither deductible nor capitalised for a holiday home (private use but no PPOR exemption).
Alex
 
Hold on. I don't get that. You're saying interest on an asset purchased for private use (but which doesn't have the PPOR exemption) gets added onto the cost base for CG calculations?

That's correct. If you purchase a holiday house, for your own use, you will pay CGT when you sell. However, the holding costs (rates, interest etc) are added to the cost base, reducing your capital gains.

This is for purchases dated after August 1991
 
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Thanks James, I had a quick look for an ATO reference but couldn't find one. I was sure that was the case, but I know there are some very knowledgeable and experienced people on this forum so didn't want to push what I thought was the case unless I was 100% sure, and I was only 99% sure. :)
 
Wow! The holiday house thing is surprising. I would never had guessed you could add the interest onto the cost base. Mind you, I don't have a holiday house, so is irrelevant in my case.
 
Yes, I hadn't heard that one before either!

But still not enough to persuade me to buy a holiday house.

Too expensive as nothing is deductible. The other thing is that it ties you to a place: I'd rather holiday in different countries and cities.
 
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