Taxable part?

[Anonymous]

From: Anonymous


Hello,

I purchased my first home 1 year ago with a loan of $200K. I've been living in the home ever since and paying it off as quickly as possible. The loan has a redraw facility.

The lowest I ever got the loan to was $135K owing. However, I used the redraw facility for various personal purchases and also for a kitchen renovation. So at present I have $155K owing on the home.

I'm wondering if I moved out right now and rented out the house, what is the principal amount who's interest is tax deductible? Is it $135K, or is it $155K? Or perhaps it is something between the two?

Cheers

Andrew

 

[Sim]

Reply: 1
From: Sim' Hampel


This is not a question easily answered... the calculations required to determine the amount that can be claimed are quite complex. I strongly suggest you have a good talk to your accountant about this, and clearly document your decisions and motivation when making a claim.

I would imagine that you'd not have much trouble claiming the interest on $135K... but you should be able to get more if your accountant can work it out for you.

 

[WebBoard]

Reply: 1.1
From: Will G


You should be able to claim interest on $135K + (Value Of Kitchen Renovations) when it is rented. There would probably be an adjustment for the time you have lived in the house after the kitchen was renovated up until it was rented.

A quantity surveyor and/or your accountant should be able to advise.