Empty properties eating up cash flow

[spooky]

Hi

I have the mis fortune at the moment of 2 properties being empty.

They are eating into my cashflow big time .

Fortunatly I have a reasonably large line of credit available which i will obviously have to use in the near future.

My question is Can I use the line of credit to payoff bills like council rates and depreciation reports and still claim the interest as a tax deduction?

Obviously using money from the line of credit to make the monthly mortgage payments on another line of credit ain't the best way to do things. But I hope this to be a very short term remedy for the situation.

Question. Interest accrued on the above method would not be tax deductible am i right?

I guess i would have to treat it like a personal loan to myself.


Thanks for your guidance in advance

 

[Kristine..]

Spooky

If you bought maintenance items eg paint, or some shrubs for the garden, and put these purchases through your credit card, and was charged interest by the card supplier, how would you treat this interest?

The interest was incurred in maintaining the investment property.

Ditto, paying rates, mortgage payments etc. What distinction from an expense / taxation point of view is there between a default interest charge if you didn't pay the mortgage this month, or paying the mortgage using another source of funds?

All expense including interest relating to purchases, charges etc incurred in the pursuit of income is allowable to be offset against the income. This is what negative gearing is all about.

Just keep your records clear. eg if you have used the credit card, line of credit or other funding for a variety of purposes, some of which are private expenditure, write up an explanation and attach it to the monthly statement so that you can apportion the interest between income producing debt and private debt.

Why are two properties vacant? Ouch, ouch. I hope you find tenants soon

Cheers

Kristine

 

[henryye]

Finding a tennant

Spooky,

You might want to consider using some innovative ways of finding a tennant, e.g. by placing a letter box drop in all similar type of properties around the block.

I have used this techique a number of times and I have often found tennants living in the same building that want to move to my unit because their unit is being sold and they have to move out, or finding tennants who have friends living on the same street and that they want to move closer to them.

Failing that, try dropping your rent or advertise through a different agency.

Good luck finding tennants!

Henry.