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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

    Joined:
    12th Nov, 2015
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    Location:
    VIC
    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
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
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    Location:
    Sydney
    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.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
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    Location:
    Sydney
    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.