Deducting mortgage interest on investment property renovation

 Author: TaxTalk1234(Dynamo)Dynamo

23 Apr 2026

While technically the interest is deductible until the point in time at which you change your intentions, it could be very difficult to prove that your intention hasn't already changed given it sounds like the financial challenges you are in has already arisen. However obviously depending on your circumstances you may be able to demonstrate this. For example, if you were renovating a property and lost your job 6 months into the renovations and decided to move into it as a result, that's a clear delineator as to when your intention changed. But if your financial challenge has arisen already and its already clear from your finances that you will need to sell your current home and move in post-renovations regardless, then that points to intentions having already changed. However if you can demonstrate that while you have already lost your job, you know that you have 5 months of living costs available to find a job before you would need to consider moving into it instead and wouldn't move in if you get a new job, that's different. So basically it depends on your circumstances and what you can demonstrate as to your intentions

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 Author: TaxTalk1234(Dynamo)Dynamo

23 Apr 2026

One caveat on my comment above is that this is the situation if the renovations are not considered "substantial". If the renovations are substantial, to the effect that the house could not lawfully be occupied during the renovations, then you can't claim a deduction for the mortgage interest while renovating (it would instead go into the cost base of the property). But if its just something where you couldn't have tenants in it, but could live there yourself if forced to (even though it would be very impractical and challenging to do so), then deductions can be claimed

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