Claiming Interest on renovation loan

Hi,

I will be moving out of my PPOR in about 10-12 months and turning it into an IP, i will be doing a bit of cosmetic revonvation and have a query on the deductibility of borrowed money

This is my understanding;

That even when a property is a PPOR when renovations are done , you can claim a decution for capital works later on, if and when it becomes an IP (correct?)

If so, great.


What i want to do is also be able to claim a deduction on the interest from borrowed funds used for the reno.

How would I go about this? e.g when i covert the PPOR loan to an IP loan just get in and smash out the renovations ASAP and then have it listed for rent?

Thanks for your help in advance, my heads in a bit of a grey area where this is concerned.
 
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Yes captial works would be deductible via claiming depreciation.

Interest on monies borrowed in association with the property could be deductible once the property becomes income producing or available for rent.

I think you would have a hard time justifying the claiming of interest before renting it out.
 
Would one way be to have it available to rent / or rental agreement signed 'pending renovation' or' subject to renovation' or something to that effect? ( i should be only looking at 3 weeks, 4 max of renovations *touch wood*)

Would that fly with the tax office ?
 
Would one way be to have it available to rent / or rental agreement signed 'pending renovation' or' subject to renovation' or something to that effect? ( i should be only looking at 3 weeks, 4 max of renovations *touch wood*)

Would that fly with the tax office ?

I don't know.

Based on steele's case interest on a loan to construct now and rent out in the future could be deductible as long as certain steps are undertaken. I suggest you read steele.
 
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