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craig_day(Initiate)Initiate
24 July 2023

Hi All,

We have seen more cases with a taxpayers borrowed more fund for their invesment property (at settlement). For example, fund required at settement is $690,000.00, fund borrowed is $720,000.00. Tax payers declare they used the surplus fund ($30,000.00) to reimburse themself for the initial deposit of the property and wish to claim the interest charge of the whole $720,000.00. Question here is: is the interest charge of the surplus fund tax deductible? I think they may not be tax deductible, but i want to double check with the ATO.

Thanks in advance.

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4 replies
626 views
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JoanATO(Community Support)Community Support
25 July 2023

Hello @craig_day,


The general rule when claiming interest expenses is if you take out a loan to buy a rental property, you can claim the interest charged on that loan, or a part of the interest, as a deduction.

 

But, the property must be rented, or available for rent, in the income year for which you claim a deduction. You can also find more information on our ‘Rental properties – interest expenses guide’ which outlines what you can and can’t claim on the loan.

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Most helpful reply

JoanATO(Community Support)Community Support
25 July 2023

Hello @craig_day,


The general rule when claiming interest expenses is if you take out a loan to buy a rental property, you can claim the interest charged on that loan, or a part of the interest, as a deduction.

 

But, the property must be rented, or available for rent, in the income year for which you claim a deduction. You can also find more information on our ‘Rental properties – interest expenses guide’ which outlines what you can and can’t claim on the loan.

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is interest on surplus borrow fund of an invesment property loan tax deductible | ATO Community