From: Ken .
Hi all,
Have been reading the 01/02 rental properties ATO Tax guide. In regard to interest, it says that the interest charged on a loan to purchase a rental property can be claimed as a deduction, provided the property is rented or available for rental in the income year that the claim is made (I'm sure this is not news to any of you.)
This means that if you buy a house and renovate it straight away, you cannot start to claim a deduction on the interest until you are finished and make it available for rent (I know some put a 'for lease' sign out front to try and get around this, but is that legal?)
The rental guide also says that the interest on a loan to purchase land to build a rental property on is deductible from the time you took it out.
My Question is - Could you claim a deduction on the interest of the Land Value component of the house above that is being renovated prior to rental?
eg. Purchase Price - $100k
renovation Cost - $20k
Borrowings - $120k
Land Value (rates notice) $40k
Claim deduction for interest on $40k for renovation period.
I'll be interested to see what your thoughts are on this (especially. Dale)
Thanks
Ken
Hi all,
Have been reading the 01/02 rental properties ATO Tax guide. In regard to interest, it says that the interest charged on a loan to purchase a rental property can be claimed as a deduction, provided the property is rented or available for rental in the income year that the claim is made (I'm sure this is not news to any of you.)
This means that if you buy a house and renovate it straight away, you cannot start to claim a deduction on the interest until you are finished and make it available for rent (I know some put a 'for lease' sign out front to try and get around this, but is that legal?)
The rental guide also says that the interest on a loan to purchase land to build a rental property on is deductible from the time you took it out.
My Question is - Could you claim a deduction on the interest of the Land Value component of the house above that is being renovated prior to rental?
eg. Purchase Price - $100k
renovation Cost - $20k
Borrowings - $120k
Land Value (rates notice) $40k
Claim deduction for interest on $40k for renovation period.
I'll be interested to see what your thoughts are on this (especially. Dale)
Thanks
Ken
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