Dual key - deduct interest?
- Thread starter matt88
- Start date
Oh - never seen anything like that before. Are you sure you're allowed to rent them out separately? I guess there's less of an issue if you're living there.
Not if one title. No way to apportion really.
Depends upon what your finance contract says.
Otherwise common law approach is that where the agreement is silent then the creditor may decide to which debt account a payment actually goes.
It would be very unusual for a creditor to favour one account over the other and even if you co-drafted an agreement (colluded ?), then the Commissioner might determine upon the facts that this is a scheme to which the Part IVA anti-avoidance provision may apply.
Better get detailed advice before you file a return !
The contract for acquisition and the finance contract would both require review. If the contract doesn't provide a separate legal title to each portion of title I cant see a taxpayer streaming deductions to one ownership interest v's another. As Rob mentions Part IVA is almost assured. But Part IVA is just a deadlock breaker...I suspect the issue is broader.
These issues aren't greatly different from the Commissioners views in deductions for Hybrid Trusts. Its little different to the issue of a taxpayer renting 50% of their home either. s8-1 ITAA97 allows a deduction to the extent that the interest is incurred in earning assessable income. The ATO would argue that the loan is incurred to the extent of 50% of income. The danger is that the ATO might also take its usual hardline approach and just deny the whole deduction and allow you to fight it. That gets expensive.
I wouldn't claim a deduction greater than 50% without a private ruling.
These issues aren't greatly different from the Commissioners views in deductions for Hybrid Trusts. Its little different to the issue of a taxpayer renting 50% of their home either. s8-1 ITAA97 allows a deduction to the extent that the interest is incurred in earning assessable income. The ATO would argue that the loan is incurred to the extent of 50% of income. The danger is that the ATO might also take its usual hardline approach and just deny the whole deduction and allow you to fight it. That gets expensive.
I wouldn't claim a deduction greater than 50% without a private ruling.
