Deductible Interest or not ?

[RetiredBy50]

Let's say you used $100K from LOC to invest in Shares.
Later sold all the shares for $90K (with loss) and
deposit back $90K to the LOC.
Now you owed $10K to the bank.

Is this $10K still tax deductible (eventhough you do not have any investment in shares) ?

Does anyone know ?

 

[manny]

Hi Retiredby50,

I would think so, as the intention of the loan was to invest in shares, so even if you made the $10k loss, the loan still needs to be serviced, therefore should be deductible (not like you used that $10k to buy a car)...

Cheers,

MannyB.

 

[Puppeteer]

This ain't advice, but AFAIK it is still deductible because the purpose of the loan was for investment (ie you purchased something for generation of income). It's just that the investment didn't perform as you would have liked it to.

 

[1037]

Hi Retired by 50,

You have made a $10k Capital Loss that you could claim against a future capital gain. You would be deemed to have borrowed the money for the purpose of investing in shares so you should be able to claim the interest.

Disclaimer: not an accountant.

 

[DaleGG]

Hi

Yes, the interest on the $10k is tax deductible. I'll see if I can post the legal authority for the deduction . . .

Dale

Originally posted by RetiredBy50
Let's say you used $100K from LOC to invest in Shares.
Later sold all the shares for $90K (with loss) and
deposit back $90K to the LOC.
Now you owed $10K to the bank.

Is this $10K still tax deductible (eventhough you do not have any investment in shares) ?

Does anyone know ?

 

[DaleGG]

Re: Re: Deductible Interest or not ?

Me again

I would use this ruling as a starting point . . .

TR 2000/D3

but, the real authority is, in fact, Browns case

Cheers

Dale

Originally posted by DaleGG
Hi

Yes, the interest on the $10k is tax deductible. I'll see if I can post the legal authority for the deduction . . .

Dale

 

[RetiredBy50]

Guys

Thanks very much for you comments