Deposit interest tax deductible?

[Blueberry]

Hi,
I bought an off the plan house and paid a 10% deposit. It took 6 months to build and settle on the property. Is the interest on the deposit tax deductible during this time.

I seem to be reading and hearing conflicting reports.

 

[D.T.]

I would say yes (assuming itll be a rental)

Not any different to someone building a house (for immediate rental) claiming the interest during construction.

 

[Terry_w]

Possibly depend on where the money come from and the use of the property. check with your tax agent.

 

[Blueberry]

I split our home loan and borrowed from there for the deposit. The house is for investment purposes and was rented the day after settlement.

I did hear things such as "yes, but it has to be income producing in that financial year", "no, as it isn't income producing at that point" and I also wasn't sure as technically we didn't own the property at that point and most things I read were regarding house and land packages.

 

[Scott No Mates]

Speak to your accountant - this may be considered part of the cost of acquisition and added to the cost base. If you had bought an existing dwelling you wouldn't have incurred the cost.

 

[CHAOS]

If you had bought an existing dwelling you wouldn't have incurred the cost.

If you used borrowed money for the deposit you would have interest costs between signing and settlement.

 

[Blueberry]

Speak to your accountant - this may be considered part of the cost of acquisition and added to the cost base. If you had bought an existing dwelling you wouldn't have incurred the cost.

He seemed to indicate that we couldn't as it wasn't income producing (a couple of weeks of the interest were last financial year). I have heard stories that would contradict this. Hence I am trying to get clarification and hopefully some evidence to the contrary from accountants on here to bring back to him.

As CHAOS mentioned we would have incurred that anyway between signing and settlement. So are we able to ignore the off the plan bit and just ask if interest on a deposit is deductible before ownership?

 

[Paul@PFI]

Deductibility of interest on the deposit will depend on the use of the premises when it is finally acquired at settlement.

If acquired to earn rent I would imagine it is tax deductible. If you reside in it then non-deductible. If you dont make it available for rent as soon as practicable it may not be deductible. Some issues of fact may require review such as a tenancy agrrement, agency agreements etc...