How can we show a loan ($44k) to save some tax

[ipinvestor]

TAX Related advice please..................
We bought our 3rd IP in Dec 2009 for $290K. Total purchase cost $305K including LMI, borrowing cost, stamp duty, settlement fee etc.
Bank lent us $264K and rest of $41K we raised by borrowing from friends, from son's saving etc.
After 3 months we got a new valuation report and We applied for a loan on our PPOR in April 2010. Bank approved and lent us $44k as a new investment loan. Now we are in the process of buying 4th IP. We are buying for $265K.
My question is : Where we should show this $44K investment loan? If we show it for 3rd IP, we can show $41 K and if we show for last purchase, it go in next financial year as settlement is on 5th of August 2010.
If not clear pl ask Qs.
Thanks...

 

[Peter_Tersteeg]

You deduct the $44k against whatever it was actually used for. If you used it to purchase your PPOR which isn't a deductible asset, you don't get to deduct the interest on that loan.

 

[ipinvestor]

Hi, Let me clear about that loan. It wasn't for PPOR. We withdraw equity from PPOR, that is $44K for investment purpose. But we got that money after settlement of 3rd IP.
Thanks.

 

[Gools]

What have you done with the $44k? Just haven't drawn it down yet?
If you use it as the deposit on IP4 then you can only claim the interest next year. You're only talking interest on $44k for 3 months so less than $1000 and after tax less than $500. Not too much of a problem is it?

Gools

 

[The Y-man]

We bought our 3rd IP in Dec 2009 for $290K. ... $41K we raised by borrowing from friends, from son's saving etc.
...

Are you paying interest on this?

. Bank approved and lent us $44k as a new investment loan. Now we are in the process of buying 4th IP. ...

Is the 44k drawn down?

The Y-man

 

[Peter_Tersteeg]

Hi, Let me clear about that loan. It wasn't for PPOR. We withdraw equity from PPOR, that is $44K for investment purpose. But we got that money after settlement of 3rd IP.
Thanks.

Essentially the interest detectability is applied to the use of the money. If you use it as a deposit for another IP, it would likely be tax deductible.

 

[marg4000]

I would think it would only be deductible if you use it to buy an IP.

Otherwise the purpose of the loan is to repay yourself and probably not deductible.

However, it would pay to check with your accountant.
Marg

 

[redwing]

Originally Posted by ipinvestor
We bought our 3rd IP in Dec 2009 for $290K. ... $41K we raised by borrowing from friends, from son's saving etc.
...

Originally Posted by ipinvestor
. Bank approved and lent us $44k as a new investment loan. Now we are in the process of buying 4th IP. ...

Use the $44k to repay the $41k borrowed from friends and kid's savings, presuming they are still owed money; or have i skipped some info

 

[ipinvestor]

Thanks everybody,
What we did with new loan $44? As I mentioned earlier, I borrowed form friend and kids. I repayed $41K to them. I did not pay interest on that money.
Thanks.