Claiming Interest deduction in current year for investment property previously sold

Hi all,

It will be great if you guys can have an answer for this, I have been searching on ATO website for a while and can't find anything.

"My relative sold an investment property two years ago at a loss and couldn't have enough funds from the proceeds to pay off the mortgage, he is continuing to pay the interest on the loan until now. Under TR 2004/4, you can claim interest deduction after cessation of business or passive investment (rental property, shares etc.) after a few conditions have been satisfied. The question is if I am 100% sure that he is eligible for deduction, under which deduction categories (D1-D10) on the income tax return, the interest expenses can be claimed?"

This is the link for TR 2004/4:
http://law.ato.gov.au/atolaw/view.htm?DocID=TXR/TR20044/NAT/ATO/00001

 

Yes interest can be claimed under certain conditions, provided the loan hasn't been changed.

I have a future tax tip on this.

 

Usually claimed at D15.
Amend prior years within the 2 year rule

 

I claimed for many years interest on loans for shares funds (the fund name started with "N" BTW) for which I couldn't pay pay the loan from the proceeds after sale. I found the ATO rules, the accountant agreed and charged for me his advice. I did this for about 6 years until the loan was paid out refinancing to another lender and sufficient connection to the original investment was lost, well at least to a level of safety that I was willing to accept in a slightly grey area.

If you have such a loan, don't touch it.

If you have such a loan, and you have to ask which section to put the claim in, and you don't have a pro doing your tax -->

If you have such a loan after 6 years, then just pay it out and move on !

I've lost a shedload of money on shares and managed funds, never of on property. Got wonder why that it.