Does interest become deductable the day a property is put on market or when its tenanted?

From when exactly do the interest payments on an investment property become deductable ?

Scenario : Moving from PPoR mid of Feb. Putting PPoR on rental market from the 1st of Feb mentioning the availability from mid of Feb, say 15th of Feb. So I will have to work out the interest paid for the month of Feb and then divide that by the number of days in Feb. Then calculate the days property was available from (15/2) till the end of the month. Then add this interest to the interest paid in the rest of the months ?

The banks want to be notified of the PPoR to IP change only when there is a rental income .

 

When the property is available for rent, but not if you are living in it. Once you move out in your case. You will need to apportion it.

Why do you care what the bank wants!

 

Thanks @Terry_w
The banks wanting me to switch only when I get rental income is what caused this confusion.

 

Why do you care? That will mean more interest to you.

 

This doesnt impact the OP but for others reading....Deduction timing after 1 July 2019 depends if its a new build that you are constructing or if its existing property. By "you are building" I mean you are either constructing it or contracting someone to build on your land AND it is a element of a development site ie you will keep 1 and sell 1. If you are building a single dwelling the impact may not occur.

If its a new construction as part of a dev all deductions commence at the later of
1. The date when the property has a occupancy certificate and
2. The date you make the property available to rent.

Otherwise all ownership deductions may commence from the time you pay a deposit (even on the land) where the intention is to rent the property as soon as practicable after it settles and after any initial repairs are completed.

For the OP question the timing for tax deductions is from the date the IP becomes available for rent. eg Listed with agent. The bank may have a more strict requirement. This doesnt affect tax.

 

I disagree with this.

That would normally be the case, but where the taxpayer is still living in the property the expense would be private. If they had moved out and already and it was not being lived in then it would be from the date available for rent.

 

Ah yes I will agree with that view. Only when the former home is vacant and then is available for rent would the interest be deductible. Even if the lender hasnt refinanced it.

 

I was under the impression that the bank has to be updated if I move out of PPoR. As in it was a contractual obligation. I haven't read the contract yet. But looks like that isn't really the case?

 

It is probably a contractual term, but what are the consequences of non-compliance?

 

I cannot find any consequences listed anywhere in my contract. All that's there is :

 

best to seek legal advice.

 

Many lenders have two different rates.

Owner Occupied
Investor with a slight surcharge (sometimes)

Legal advice on the loan terms may indicate if they can apply arrears charges etc when you fail to advise them. The words "must" generally mean their could be a consequence. Or not. They also like to encourage you advising the change as its a APRA prudential requirement for banks. Banks have a slightly higher capital adequacy issue with investment use loans. The bank may also just be covering its butt for APRA if it shifts the onus to you to keep them updated.