Hi ATO Community,
I am seeking guidance on the correct apportionment and record-keeping for a mixed-purpose Principal and Interest (P&I) loan used to fund a partial deposit for a new investment property.
The Scenario:
- Existing Loan: I have a single P&I loan account (originally for Investment Property A).
- New Investment (Property B): I am purchasing a second investment property. The 20% deposit for this property is over $200,000.
- Drawdowns: To help fund this deposit, I made 7 separate drawdowns (due to staged payment needs or daily transaction limit) from my existing loan account over a 32-day period (23 Jan to 24 Feb), totaling $86,650.35.
- Settlement: Property B settled on 26 February 2026 and was immediately available for rent.
Questions:
- Q1. Simplification of Drawdowns: Given the 7 drawdowns occurred within a 32-day window for the same purpose, is it acceptable to treat the total $86,650.35 as a single "Portion B" for interest calculations? Or does the ATO require a daily weighted calculation for each specific drawdown date?
- Q2. Pre-Settlement Interest: For deposit payments made before settlement, is the interest incurred between the drawdown date and the settlement date (26 Feb) immediately deductible, or must it be capitalized into the cost base of Property B?
- Q3. P&I Principal Reductions: As this is a P&I loan, (a) am I required under TR 2000/2 to reduce the "Property B" portion of the debt proportionately every month as the total loan principal reduces, and (b) is a spreadsheet-based sub-ledger sufficient documentation for this?
I want to ensure my tracking is compliant while keeping the calculations as streamlined as possible. Any advice on the "best practice" for managing these drawdowns would be greatly appreciated.
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33 views
2 replies