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How to calculate "Interest deductions" with interest-only loan linked with offset account

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Hi,

 

I have an investiment property. There is interent-only loan setup for the property and also linked to an offset account.

The offset account is like my saving+transaction account, with lots of transactions in and out, such salary, payments, etc. 

To make the calculation simpler, say if the interest charged (interent-only) of the loan is $3000 per month, but because there is some "saving" money in my offset account, the actual interest charged by the lender is $2000 per month.

 

In this case, what should be the "Interest deductions" for Rent in the tax return form?

Is it #3000x12month=$36000, or is it $2000x12month=$24000?

 

A bit confused what is tax deducitable loan interest in this scenario.

 

Your professional advice and clarification will be greatly appreciated.

Thank you.

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Hi @xqx,

 

Welcome to our Community and thanks for your question!

 

Taxation ruling TR 93/6: Income tax and fringe benefits tax: loan account offset arrangements, may assist you.  Please refer to paragraph 17: What happens if the interest is deductible?

If you require further information, please phone us on 13 28 61, between 8am and 8pm, Monday to Friday. 

 

I hope this helps, JodieM

1 REPLY 1

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @xqx,

 

Welcome to our Community and thanks for your question!

 

Taxation ruling TR 93/6: Income tax and fringe benefits tax: loan account offset arrangements, may assist you.  Please refer to paragraph 17: What happens if the interest is deductible?

If you require further information, please phone us on 13 28 61, between 8am and 8pm, Monday to Friday. 

 

I hope this helps, JodieM