Hi,
I'm currently trying to clarify something and I just can't succeed to get through to a clear and definite answer. I don't think my case is unique, yet I get mixed answers and opinions but not a final and clear answer. I'll try to explain the details.
I have a Line of Credit (LOC) against my current Principal Place of Residence (PPOR) - we'll call this Property 1 (P1). I had this LOC for about five years, used for private (non-income producing) family expenses and also had our (my wife and I) income coming in regularly. We also have two Investment Properties (IP's - P2 and P3) with deposits and purchase costs covered from this LOC, but we've never claimed the interest on these deposits - and we don't plan to. Each IP (P2 and P3) has it's own separate loan with its own interest that is claimed on the Tax Return on its own - so completely independently and separately from the LOC. Therefore, as I have never claimed anything from the LOC, this has always been used as a private non-income producing account.
We are currently looking to buy another property, P4, but this is for us to move in and be our new PPOR. We would like to put our current PPOR (P1) up for rent and make it an IP. Considering this, our main question is if we can claim some (a portion) or all the interest charged on the LOC from the moment P1 becomes an IP. Once we are in our new PPOR, we will also have all our family personal expenses and income in the a account and we won't use the P1 LOC for this anymore. The P1 LOC will become a dedicated IP loan for P1. I have read the tax rules and Taxation Rulings (especially TR 2000/2) but none of the scenarios covered are for a case like ours, where the LOC was always used only for non-income producing expenses.
If the LOC is considered from the moment has been created (about five years ago), then considering all the income and expenses covered during this period, the account balance for which interest can be considered to claim when P1 becomes and IP is very low or nothing, so little to no interest will be claimable.
If the LOC is considered from the moment P1 becomes an IP (when we move out into our new PPOR P4, so in the future), then the loan from the P1 LOC on which interest can be claimed is high, so it is a considerable amount to be considered.
If this is considered differently, feel free to provide an answer.
Can you help clarify if there is any interest from the LOC that I will be able to claim once P1 becomes and IP?
Thank you for your help into this.
asi102
I'm currently trying to clarify something and I just can't succeed to get through to a clear and definite answer. I don't think my case is unique, yet I get mixed answers and opinions but not a final and clear answer. I'll try to explain the details.
I have a Line of Credit (LOC) against my current Principal Place of Residence (PPOR) - we'll call this Property 1 (P1). I had this LOC for about five years, used for private (non-income producing) family expenses and also had our (my wife and I) income coming in regularly. We also have two Investment Properties (IP's - P2 and P3) with deposits and purchase costs covered from this LOC, but we've never claimed the interest on these deposits - and we don't plan to. Each IP (P2 and P3) has it's own separate loan with its own interest that is claimed on the Tax Return on its own - so completely independently and separately from the LOC. Therefore, as I have never claimed anything from the LOC, this has always been used as a private non-income producing account.
We are currently looking to buy another property, P4, but this is for us to move in and be our new PPOR. We would like to put our current PPOR (P1) up for rent and make it an IP. Considering this, our main question is if we can claim some (a portion) or all the interest charged on the LOC from the moment P1 becomes an IP. Once we are in our new PPOR, we will also have all our family personal expenses and income in the a account and we won't use the P1 LOC for this anymore. The P1 LOC will become a dedicated IP loan for P1. I have read the tax rules and Taxation Rulings (especially TR 2000/2) but none of the scenarios covered are for a case like ours, where the LOC was always used only for non-income producing expenses.
If the LOC is considered from the moment has been created (about five years ago), then considering all the income and expenses covered during this period, the account balance for which interest can be considered to claim when P1 becomes and IP is very low or nothing, so little to no interest will be claimable.
If the LOC is considered from the moment P1 becomes an IP (when we move out into our new PPOR P4, so in the future), then the loan from the P1 LOC on which interest can be claimed is high, so it is a considerable amount to be considered.
If this is considered differently, feel free to provide an answer.
Can you help clarify if there is any interest from the LOC that I will be able to claim once P1 becomes and IP?
Thank you for your help into this.
asi102