Hi all,
I have a loan that was used to buy an investment property, so the interest on it is tax deductible.
I’ve now set up a second loan and plan to use it to make the monthly repayments (P&I) on the first loan. The second loan won’t be used for anything else.
Is the interest on this second loan also tax deductible?
Thanks.
No. It's not deductible.
First loan is deductible because purpose is purchasing the investment property.
Second Loan is not deductible because purpose is paying the First loan monthly repayments.
I think this goes back to general deduction - INCOME TAX ASSESSMENT ACT 1997 - SECT 8.1
Thanks. What about the principal portion of the monthly repayment? Say I am repaying $5,000 per month, made up of $1,000 in principal and $4,000 in interest. If I cover the $1,000 principal using another loan, is the interest on that new $1,000 now deductible given that I am essentially just replacing one loan with another while keeping the purpose unchanged? I would assume yes, as the investment purpose remains the same.
22 Apr 2024 · 6 min read time
15 Apr 2026 · 5 min read time
15 Apr 2026 · 4 min read time
374 views
2 replies