Hi,
In December last year we moved back into a house that was our PPOR in 2002and was rented out through to December 2010. We will move out of it in May this year (so, in it for around 6 months).
Whilst in there, I am renovating two bathrooms and the kitchen as well as painting, new doors / general fix ups that become necessary with renting out a property for so long. Also installaing an air con, odd ceiling fan, replacing curtains etc.
I have been keeping all receipts for work / materials etc. and plan to claim whatever I can in the 10/11 tax year - but recognise limitations due to our living there.
Whilst I have paid cash for work to date (~7k) , I want to borrow rest of the money (against this property) for the work to be done with the plan that when we move out in May, the interest on the borrowings for that work will become deductible.
We already have a loan facility on this property that we'll use, but as it's from a bank in Singapore, there are no fancy 'reno loans' / 'building loans' options - we can just draw down a block of cash.
My question is: Can I simply draw down say 100k against this property from the bank, put it into my general savings account (with other cash) and then just track expenditure, later showing the ATO if necessary that there was 100k that was drawn down for the purpose of works on the house and the work / maintenance against the house was spent from within that 100k? I recognise if I only spent 89k, then only that 89k can be claimed against.
This is convenient, but I believe this isn't possible as the funds are deemed as blended with our cash / muddled up and we lose much of the deductability.
Assuming my assumption above is correct, would it work if I set up a specific savings account which was used ONLY for the costs on that property. Put 100k into that and then draw against it as we go. That way we could show that the expenditure for the property came from that specific account and there was no blending with our other cash?
Also, we have a depreciation schedule on the house, done in 2005. Should we get a new one before I go further on the reno works, or just wait till after?
Thanks alot for any help.
In December last year we moved back into a house that was our PPOR in 2002and was rented out through to December 2010. We will move out of it in May this year (so, in it for around 6 months).
Whilst in there, I am renovating two bathrooms and the kitchen as well as painting, new doors / general fix ups that become necessary with renting out a property for so long. Also installaing an air con, odd ceiling fan, replacing curtains etc.
I have been keeping all receipts for work / materials etc. and plan to claim whatever I can in the 10/11 tax year - but recognise limitations due to our living there.
Whilst I have paid cash for work to date (~7k) , I want to borrow rest of the money (against this property) for the work to be done with the plan that when we move out in May, the interest on the borrowings for that work will become deductible.
We already have a loan facility on this property that we'll use, but as it's from a bank in Singapore, there are no fancy 'reno loans' / 'building loans' options - we can just draw down a block of cash.
My question is: Can I simply draw down say 100k against this property from the bank, put it into my general savings account (with other cash) and then just track expenditure, later showing the ATO if necessary that there was 100k that was drawn down for the purpose of works on the house and the work / maintenance against the house was spent from within that 100k? I recognise if I only spent 89k, then only that 89k can be claimed against.
This is convenient, but I believe this isn't possible as the funds are deemed as blended with our cash / muddled up and we lose much of the deductability.
Assuming my assumption above is correct, would it work if I set up a specific savings account which was used ONLY for the costs on that property. Put 100k into that and then draw against it as we go. That way we could show that the expenditure for the property came from that specific account and there was no blending with our other cash?
Also, we have a depreciation schedule on the house, done in 2005. Should we get a new one before I go further on the reno works, or just wait till after?
Thanks alot for any help.
