Is it still possible to claim interest on your new PPOR if you rent out your old PPOR whilst building?
" "IT2423 states that people who own less than three rental properties are not in business and therefore not in partnership under general law. This means that couples wealthy enough to be purchasing their third rental property can rent out their home then borrow the money to build themselves a new home and maybe claim the interest on the loan as a tax deduction against the rent earned on their old home.
Note there have been a few cases were taxpayers have unsuccessfully tried to argue they are in business. In Cripps V Federal Commissioner of Taxation 1999 AATA 937 the taxpayers owned 14 town houses and other properties at various time. The ATO was successful in arguing they were not in business but the foundation of the ATO?s argument was that they had an agent managing the properties. So it is crucial that you run the properties as a business i.e. fully mange them yourself.""
Source= BANTACS Accountants DOMESTIC INVESTMENT PROPERTIES
" "IT2423 states that people who own less than three rental properties are not in business and therefore not in partnership under general law. This means that couples wealthy enough to be purchasing their third rental property can rent out their home then borrow the money to build themselves a new home and maybe claim the interest on the loan as a tax deduction against the rent earned on their old home.
Note there have been a few cases were taxpayers have unsuccessfully tried to argue they are in business. In Cripps V Federal Commissioner of Taxation 1999 AATA 937 the taxpayers owned 14 town houses and other properties at various time. The ATO was successful in arguing they were not in business but the foundation of the ATO?s argument was that they had an agent managing the properties. So it is crucial that you run the properties as a business i.e. fully mange them yourself.""
Source= BANTACS Accountants DOMESTIC INVESTMENT PROPERTIES
