Capitalising LoC interest - property in single name, LoC in joint names

[NorwegianBlue]

I have some negatively geared property in my own name, so am claiming deductions from my personal income.

I am paying the interest from an investment-only Line of Credit. I have been led to believe that capitalised interest on the LoC is also deductible in this case.

Here's the twist - the Line of Credit is held jointly by my wife and me. How do I then apply the LoC interest deduction? Is the capitalised interest split between my wife and myself, or do I need to keep track of the different pools of investment debt in the LoC and apportion the interest that way.

For example;

$100,000 investment, $10,000 interest /yr @ 10%

In year 1;
I personally claim $10,000 deduction for the interest on the investment loan.
This $10,000 is paid from the joint LoC, balance now $10,000.

In year 2;
I again claim the $10,000 deduction on the investment loan.
What do I do with the $1,000 interest on the LoC balance of $10,000?

What if we have joint investments paid from the LoC as well?

 

[twodogs]

Interest deducibility is connected to the holder of the asset, not the loan. For me I own the assets but loans in joint names. Interest deductions (possibly including interest on interest) are all mine, assuming of course finds used for investment etc.

As for capitalising interest. Well I have done it, and have a private ruling, but subject is a can-of-worms.

If you have a few hours to spare, search this forum !