Claiming Renovation Cost Interest on Tax

Hi All,

I recently finished a renovation on my rental property which I payed for by personal savings ~50K.

I have recently re-valued the house and released a substantial amount of equity from the result of the reno's.

I would like to use some of the equity and put back the cost of the reno's (50K) back into my savings account.

If I do this, can I claim the interest on this (50K) amount back on tax as deductible debt for the reno's even if I started this equity loan after the reno's were completed?

Thanks,
Peter

 

Unfortunately no.

The only way to make those funds deductible is to use them for deductible purposes, ie, for a deposit on a new IP, or set it up as a Line of Credit that you can use to pay all your IP expenses. That way you can recycle the debt into deductible debt while saving the cash you would otherwise use for those costs.

 

Tax Tip 62: Paying Cash for a property and then getting a loan https://propertychat.com.au/communi...-for-a-property-and-then-getting-a-loan.4948/

Tax Tip 5: Reimbursing yourself - Impossible
https://propertychat.com.au/community/threads/tax-tip-5-reimbursing-yourself-impossible.1737/

 

Can't reimburse yourself sorry Pete.

Instead you could have used equity in an existing property to renovate and kept your cash to yourself. The interest on that would have been deductible then.

 

Thankyou for the replies.
Ill take this as a lesson learnt.
At least I have a nice deposit sitting there now for the next move.