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Claiming Renovation Cost Interest on Tax

Discussion in 'Accounting & Tax' started by Pete Prescott, 20th Oct, 2015.

  1. Pete Prescott

    Pete Prescott New Member

    Joined:
    20th Oct, 2015
    Posts:
    4
    Location:
    Victoria
    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
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    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.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    13th Jun, 2015
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    Location:
    Adelaide, SA
    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.
     
  5. Pete Prescott

    Pete Prescott New Member

    Joined:
    20th Oct, 2015
    Posts:
    4
    Location:
    Victoria
    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.