Interest paid before tenanted - Deductable?

[SliderC]

Hi Guys,
First time poster.

I purchased an IP in November last year which was super run down and spent around 3 months renovating it. Until now I assumed the interest payed on an investment property was 100% taxable however now Im not sure.

The loan on the house is interest only and was always to fund an investment property.

I am interested to know whether or not the interest I paid on the property for the first three months is deductable as, during that time I didnt have the property listed (it wasnt in a livable state).

Can anyone advise?
Cheers.

 

[DaveM]

Strictly speaking the interest is only deductible when the property is available for rent. A couple of weeks of reno downtime is generally fine. 3 months might be pushing it if the ATO decided to audit.

 

[jrc77]

There is a tax ruling titled "Income tax: deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities".

Can be found at http://law.ato.gov.au/atolaw/view.htm?DocID=TXR/TR20044/NAT/ATO/00001

My accountant doesn't have an issue with me doing a similar thing. Note I ensured there was some income from the property within the same financial year.

Regards,

Jason

 

[SliderC]

Thanks JRC77, you have given me hope

 

[Terry_w]

Could be deductible depending on the details - see Steele's case