Can I deduct interest payments in this situation?

[Tim86]

I've probably created a mess here... not sure.

4 properties in total.

I refinanced one IP so went from borrowing $336 000 to $432 000

I used that $96 000 to add 4 bedrooms to my PPOR which I rent out for $660 pw.

Can I deduct the interest paid on that $96 000 against one of my property's rental incomes?


Second question.

If I was to refinance my PPOR, pull $80 000 out of that, and then spend that to put a house on a block of land and keep it as a IP rental, could I deduct the interest paid on that $80 000 from the rental income for that IP?

Thanks.

 

[westminster]

Yes to second - make your life easier by using a LOC to do it and keep it separate and ONLY for investment purposes

I'm going to leave the first one as it's likely a mess of yes/no/perhaps/%of how much you rent out your PPOR and claim

 

[Terry_w]

The answer to both is "possibly". It depends on the situation and how it is all structured.

 

[D.T.]

More importantly, how / why did you get into this situation so you can avoid it in future? And so other readers know to avoid it in future too.

 

[Jamie M]

I've probably created a mess here... not sure.

4 properties in total.

I refinanced one IP so went from borrowing $336 000 to $432 000

I used that $96 000 to add 4 bedrooms to my PPOR which I rent out for $660 pw.

Can I deduct the interest paid on that $96 000 against one of my property's rental incomes?


Second question.

If I was to refinance my PPOR, pull $80 000 out of that, and then spend that to put a house on a block of land and keep it as a IP rental, could I deduct the interest paid on that $80 000 from the rental income for that IP?

Thanks.

Hiya

Was the $96k set up as a separate loan? If so - should be fine. If not - a bit of a mess......ask your accountant if you can apportion it.

With the $80k loan - make sure it's set up as a separate loan! That way - there shouldn't be any issues with deductions given the purpose.

p.s - get yourself a good accountant.

Cheers

Jamie

 

[Tim86]

Thanks for all the advice.

Will pass it along to my accountant friend. She seems to know her stuff, she actually gets excited about tax... has a mug that says "I had the time of my life at tax camp" ...

Will pass along the points you guys shared and see what she says.

Thanks

Tim