Apportioning Interest on IP turned PPOR

Discussion in 'Accounting & Tax' started by Frosty123, 3rd Jul, 2016.

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  1. Frosty123

    Frosty123 Well-Known Member

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    Hi all,

    I moved into one of my IP's a few months back.
    Obviously the mortgage interest is only deductible for the period the property was being rented out for.
    Not sure how to apportion the interest though.
    Would I calculate it pro-rata (ie. if leased out for 26 weeks of the year, 50% is deductible)
    or would I sum each months interest expense, and calculate the interest pro-rata on the month I moved back in?

    Thanks

    Frosty
     
    Frosty123, 3rd Jul, 2016
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No, it would be the months while it was available for rent that would be deductible. If you moved in mid stream you can apportion that month.

    Apportioning a whole year's interest on a percentage basis wont work out if you bring in a large sum of cash to store in the offset account, for example.
     
    Terry_w, 3rd Jul, 2016
    #2
    Daniel Taborsky, Simon Moore and Frosty123 like this.
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Ditto all costs even Council rates....Its not always the date you pay an expense that determines its deduction. Often the period during which the cost was incurred is relevant.

    Tip : Ensure you record the date you moved in as it will be needed one day for CGT.
     
    Paul@PAS, 4th Jul, 2016
    #3
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