Full Interest Deductibility on 105% loans?

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From: J D


Hi Guys,

I am buying in Qld (using io loan) and my purchase costs include stamp duty, conveyance costs, building/pest inspections, bank loan costs etc, these are 'capital' costs and not deductible against rental income (can only used to calc capital gain on sale I believe).

My question is: I am borrowing 105% of IP purchase price to cover these 'capital' purchasing costs as above; am I allowed to claim the interest on the borrowed component for purchase costs as a tax deduction each year?
ie. IP cost $280k, borrow $294k, is interest deductible on 280k or 290k?

thanx in advance
JD

 

[Rolf Latham]

Reply: 1
From: Rolf Latham


I would say on the whole lot, but then I dont have CPA after my name )

Ta

Rolf

 

[DaleGG]

Reply: 1.1
From: Dale Gatherum-Goss


Hi

Yes, you can claim the interest on the full loan of $294k.

Good luck with the deal

Dale