I have 2 houses. one i live myself. the other one i give to my mum and my brother to live and didn't charge rent. so i dont have income from the investment house, and i didn't do any negative gearing by deducting any loan interests. my question is when i sell the investment house, can i deduct all the loan interests that accumulated for many years from the capital gains?
Maybe. You don't deduct it from the capital gains, it's add to the cost base.
You can add the interest expense, that couldn't be a deduction and came from the loan used for purchasing the property you let your mother and brother live in, to the cost base
Deductibility of a loan depends on the purpose and not what is used as security. Redraw is considered a new loan.
Hi @mglw,
In your situation, no – you can’t deduct the accumulated loan interest from the capital gain when you sell.
Interest on a loan is only deductible where the property is used to earn assessable income, such as being rented or genuinely available for rent. Because the property wasn’t used to produce income, the interest is a private expense.
Private interest expenses can’t be carried forward and claimed later, and they also can’t be added to the CGT cost base. Only certain costs can be included in the cost base, such as the purchase price, stamp duty, legal fees, selling costs, and capital improvements.
When you sell the property, CGT is worked out without including those loan interest amounts. You may still be eligible for the CGT discount if you’ve owned the property for more than 12 months.
If the property was rented, or genuinely available for rent, at any time in the past, the answer could be different. But based on what you’ve described, the interest isn’t deductible and can’t be used to reduce the capital gain.
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
97 views
2 replies