Claiming interest expense if loan under different name

Hi all
I've got a question regarding a commercial investment property:
As the bank is unable to lend the full amount to allow purchase of a commercial property, if your parent agrees to lend you the balance, can you claim the interest exp in your tax return for the amount you paid for the interest of your parents loan? Assuming that the parents loan is for the same property in question, so your parents is sort of borrowing under your behalf, but just not officially
Will the ATO accept the interest deduction for the portion you paid for the loan under your parents name? And also it will not be treated as income from your parents return, since you it goes straight to the bank repayment?
Thanks a bunch for any advice in advance!

 

Depends if there is evidence of a written loan and on terms acceptable. Then the loan must be advanced correctly so the proceeds are used to settle the property in a clear and evident manner and thereafter the loan is maintained and paid on reasonable terms - Not just a gift called a loan etc

A solicitor may need to assist to facilitate their loan

 

If someone else lends you then there is a loan in place. If you want to claim the interest on this loan the agreement must be in writing and on commercial terms.

You cannot claim the interest on any other person's loan and they won't be able to claim the interest themselves unless it relates to the production of assessable income.

 

if you have an on-lending agreement between you and your parents i wouldnt see an issue. just make sure it is commercial and you have a written agreement in place (TerryW has done quite a few of those for our clients).

sorry it will be income in your parents return. but if they have borrowed funds and on-lent then they will get a deduction for that.

 

The parents would have income from their child and an outgoing for the bank. If they are the same rate no issue. And rate variance may add taxable income. If they receive Centrelink benefits these loan agreements are essential to avoid gifting. If the parents are o/seas then a withholding tax issue occurs.

Mike had a good post on the issue last week https://www.propertychat.com.au/community/threads/loans-overseas-and-interest-deductions.26809/

 

Thanks heaps for all the useful input guys, much appreciated!