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Interest deduction when changing use of property

Initiate

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Replies 5

I have a home loan that was originally used to purchase an investment property. While the property was rented out, I was able to claim a deduction for the interest.

Since this time, I have moved into the property and made it my principal place of residence (PPOR). I understand that I can no longer claim a deduction for the interest, as there is no longer any income generation from the property.

If I was to use this same property as an investment property once again, can I resume claiming a dedication on the interest (once the property is available for rent)?

Note that there would be no refinance event with the bank in this secenario, the same loan would continue to operate throughout.
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Most helpful response

Devotee

Replies 4

Yes.  The purpose of the loan was to purchase the property, which is income producing as it is once again being rented out.  

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Most helpful response

Devotee

Replies 4

Yes.  The purpose of the loan was to purchase the property, which is income producing as it is once again being rented out.  

Initiate

Replies 3

Thanks for your help. Can you direct me to the relevant guidance note / ATO advice that confirms this (or other primary source I can reference)? 

Devotee

Replies 2

This ATO advice includes the following paragraph.

 

"Whether interest has been incurred in the course of producing assessable income generally depends on the use to which the borrowed funds have been put. Where a borrowing is used to acquire an income producing asset, the interest on this borrowing is considered to be incurred in the course of producing assessable income. With regards to borrowings relating to property, the interest will be deductible to the extent that the property is used to produce assessable income."

 

The advice also confirms my response to you other post regading an offset account.

Initiate

Replies 0

Many thanks!

Initiate

Replies 0

can you add this 


@Glenn4802 wrote:

This ATO advice includes the following paragraph.

 

"Whether interest has been incurred in the course of producing assessable income generally depends on the use to which the borrowed funds have been put. Where a borrowing is used to acquire an income producing asset, the interest on this borrowing is considered to be incurred in the course of producing assessable income. With regards to borrowings relating to property, the interest will be deductible to the extent that the property is used to produce assessable income."

 

The advice also confirms my response to you other post regading an offset account.


Can you add this to the other post, and I will accept the answer there too for others to find. Thanks!