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?
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?