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AminSer(Initiate)Initiate
4 May 2026

Hi,

I have withdrawn approximately $50,000 from my owner‑occupier home loan to cover costs associated with purchasing an investment property, including stamp duty, conveyancing fees, and building inspection costs. I understand that most of these expenses are not immediately tax deductible and are instead taken into account when calculating capital gains tax on disposal of the property.

Could you please confirm whether the interest incurred on the portion of the loan used for these expenses is tax deductible on an annual basis?


Thank you

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2 replies
43 views
2 replies

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Most helpful reply

Taxduck(Taxicorn)Taxicorn
4 May 2026

Interest on borrowed money to acquire a property is deductible once the property is rented or genuinely available for rent. Costs mentioned are costs of acquiring a property. See below

Interest expenses | Australian Taxation Office

If the property is not rented then interest costs are part of the cost base (for CGT purposes).

Cost base of assets | Australian Taxation Office (element 3)

".any non-deductible interest on loans used to finance 

  • the acquisition of a CGT asset"


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YellowPotato(Taxicorn)Taxicorn
4 May 2026

It may be best to see a financial advisor/tax agent about these rules or ask ATO's technical assistance or private ruling


Could you please confirm whether the interest incurred on the portion of the loan used for these expenses is tax deductible on an annual basis?

  • It sounds like you are following ATO's ruling correctly and cost base/deduction


Generally, the deductibility of a loan is connected to the purpose of a loan. A redraw is considered a new loan so the purpose of the redraw would determine its deductibility. If a loan has mixed purpose, then apportion the interest. Then whether it's deduction such as rental expense or cost base depends on the asset


TR 2000/2

https://www.ato.gov.au/law/view/document?docid=TXR/TR20002/NAT/ATO/00001

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/calculating-your-cgt/cost-base-of-asset#CostBaseElement3

Liked by AminSer

Most helpful reply

Taxduck(Taxicorn)Taxicorn
4 May 2026

Interest on borrowed money to acquire a property is deductible once the property is rented or genuinely available for rent. Costs mentioned are costs of acquiring a property. See below

Interest expenses | Australian Taxation Office

If the property is not rented then interest costs are part of the cost base (for CGT purposes).

Cost base of assets | Australian Taxation Office (element 3)

".any non-deductible interest on loans used to finance 

  • the acquisition of a CGT asset"


Liked by AminSer

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Interest Incured on a Home Loan | ATO Community