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jaybeebeggs(Initiate)Initiate
4 Aug 2021

A question popped up in my head.

I'm buying and investment property. Bank knows that and is happy to structure the loan as owner occupied. Will that affect my ability to claim interest deductions in the future? My understanding here is that the loan matter is between me and the bank, and if the bank is ok with it, then it's fine. As long as the property is used as an investment property it's fine to claim interest deductions regardless of the nature of the loan.

Am I correct?

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JodieR_ATO(Community Support)Community Support
5 Aug 2021

Hi @jaybeebeggs,


Whether you can claim interest depends on how you use the borrowed money, not how the bank labels the loan.


If you use the loan to buy a property that is genuinely available for rent, you may be able to claim a deduction for the interest on that portion of the loan.

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JodieR_ATO(Community Support)Community Support
5 Aug 2021

Hi @jaybeebeggs,


Whether you can claim interest depends on how you use the borrowed money, not how the bank labels the loan.


If you use the loan to buy a property that is genuinely available for rent, you may be able to claim a deduction for the interest on that portion of the loan.

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BareNecessities(I'm new)I'm new
12 June 2024

Hi,


Given it has been a few years, I wonder if the laws have changed.


Say I currently have an owner occupier loan, and wanting to access the equity (as a separate loan) to pay deposit + other costs for an investment property, does it matter what loan type (i.e.: owner occupier or investment loan) is used?


Additionally, how would I prove that 100% of this equity-accessed loan was used for investment purposes when claiming expenses?

KylieATO(Community Support)Community Support
13 June 2024

Hi @BareNecessities,


It doesn't matter how the bank structures the loan it isn't relevant to us. You will need to keep records and evidence of where the money is used for investment purposes.

credithub(Initiate)Initiate
8 July 2025

@jaybeebeggs

Yep, the ATO’s not too concerned about whether your loan is labelled “owner-occupier” or “investment” by the bank. What really matters is how the funds are used.


If the money is used to buy an investment property or cover related costs (deposit, stamp duty, etc.), then the interest is deductible, even if the loan is technically an “owner-occupier” product. Just make sure the property is being rented or genuinely available for rent.


Biggest thing is keeping good records. If you're using equity, keep that loan separate and document exactly where the funds go — that makes it easier to prove 100% of the funds went toward the investment.

Hope that helps!

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Does it matter what type of loan I use to buy an investment property? (owner occupied or investment) | ATO Community