Prepay interest for new prop?

From: Glenn Mott

Here is one for the tax guns..

If someone was to buy a prop on say, the 1st of June and borrow the entire amount on an interest only loan, then on the 30th June pay the next year's interest in advance, would you get the full amount paid as a tax deduction or would you get the amount paid multiplied by 1/12 as you had only owned the prop for 1 month of that financial year??

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Reply: 1
From: Dale Gatherum-Goss

Hi Glenn!

Under the present rules, you would get a tax deduction for the entire amount of interest paid. As mentioned in one of my earlier posts, you might need to explain why you did this and the tax office would look for a commercial reason such as a slightly reduced interest rate.

I hope that this helps

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