ATO Community

Re: Interest on rental property loan deductibility

Newbie

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Replies 4

Hi

 

If a rental property is purchased in my name only but the loan on the property is in joint names with my husband am I able to claim 100% of the interest on the loan in my rental property expenses or can I only claim 50%? I claim 100% of the rental income and expenses in my return as the property is in my name but wasn't sure about the loan interest.

 

Thanks

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Most helpful response

Former Community Support

Replies 2

Hi @KateH19,

 

Welcome to our Community!

 

We've checked information with our specialist area who have confirmed, you're not prevented from claiming the whole of the interest incurred (100%) on the loan to purchase the property just because the rental property loan is in joint names.

 

Generally, rental property income and expense amounts should be declared in the income tax return of the legal owner, that is, the person whose name is on the registered title for the property. If there are joint tenants then each owner should declare 50% each. For tenants in common, the relevant percentage is that of each ownership share.

 

There can be situations, where the nature of the arrangements, such as ‘beneficial ownership’ being different to legal ownership, may create an exception. However, for related taxpayers, such as husband and wife, the ATO ordinarily treats these situations as not involving such a difference. See paragraph 41 of TR 93-32. There could be circumstances where such a difference can occur for related taxpayers, but merely having a joint loan is not treated by the ATO as falling outside that general rule.  

 

Thanks, JodieH.

4 REPLIES 4

Taxicorn

Replies 0

You would 100%

 

Most helpful response

Former Community Support

Replies 2

Hi @KateH19,

 

Welcome to our Community!

 

We've checked information with our specialist area who have confirmed, you're not prevented from claiming the whole of the interest incurred (100%) on the loan to purchase the property just because the rental property loan is in joint names.

 

Generally, rental property income and expense amounts should be declared in the income tax return of the legal owner, that is, the person whose name is on the registered title for the property. If there are joint tenants then each owner should declare 50% each. For tenants in common, the relevant percentage is that of each ownership share.

 

There can be situations, where the nature of the arrangements, such as ‘beneficial ownership’ being different to legal ownership, may create an exception. However, for related taxpayers, such as husband and wife, the ATO ordinarily treats these situations as not involving such a difference. See paragraph 41 of TR 93-32. There could be circumstances where such a difference can occur for related taxpayers, but merely having a joint loan is not treated by the ATO as falling outside that general rule.  

 

Thanks, JodieH.

Newbie

Replies 1

I have a similar question, what if the investment loan is in 1 spouses name but the title of the house is in both names. Is the deductions allowed to be 50/50??

Community Moderator

Replies 0

Hi @jjpumpoi,


The income reported and the expenses claimed are in line with the title of the property. So in your situation it would be 50/50.


Thanks


KylieS