interest deductability - from PPOR to IP

Discussion in 'Accounting & Tax' started by lamentra, 15th Jan, 2017.

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  1. lamentra

    lamentra Member

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    Hi all,

    I have a question re: the timing of claiming interest.

    Example,
    I live in house 1, with a 400k home loan, and 400k sitting in the offset account.
    I buy house 2 with the 400k from the offset, and turn house 1 into an investment property.

    Question is - when can I start claiming interest deduction from house 1?
    - settlement day?
    - day the tenant moves in?
    - day the property is advertised for rental?
     
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  2. Ross Forrester

    Ross Forrester Well-Known Member

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    The day you move out of your home (property one) and the home is genuinely available for rent.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Assuming that $400k loan has never been redrawn.
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    and the purpose of the 400 was to buy that property, not some other asset

    ta
    rolf
     
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  5. Kassy

    Kassy Well-Known Member

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    Hi,

    If you borrowed an extra say $100k when it was your ppr for renovations and no other purpose would the additional $100k be deductible when it became an IP? Would you need to do it as a split?

    Thanks,

    Kassy
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If those renovations were on that same property then yes.
     
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  7. Kassy

    Kassy Well-Known Member

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    Cool. Thanks Terry!
     
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  8. lamentra

    lamentra Member

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    Thanks Terry and Rolf.
     
  9. mr_alex

    mr_alex Well-Known Member

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    if redraws were made on that $400k for property 1 while it was ppor, does that make any future interest deductibility void if it's now a rental, or can an accountant apportion it? sorry if it's an easy question
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    If redrawn it will depend on the use the funds were put to. If it created a mixed purpose loan there may be some complex apportioning calcs to do