Joint venture with developer

Thanks both @Westminster and @Terry_w . You both validated an idea I was thinking of but I was missing the interest deduction part. I was initially thinking that I will invest my equity in share market and use monthly salary income to fund the JV but instead I could do the opposite and claim interest expense.

@Terry_w, so if I borrow money from my first IP equity, I can claim the interest expenses, I understand that.
And I can capitalise all interest expenses until completion of construction, right?
Also how will the bank finance be structured? I have $150k from my first IP equity and on getting title I want to finance all of $400k rather than just $250k construction costs.

 

You need specific advice. Interest could be deductible as can capitalised interest, but only under certain circumstances

 

From 1 July 2019 you may not get an interest deduction.

 

Is that because of ALP proposal? Do you have any news /article reference for this?
As far as I know, ALP proposal will allow expense deduction only upto the income aka no negative gearing, this doesn't mean interest deduction is not allowed.

 

No. Its proposed in the past budget. ALP agree with it and would likely implement it anyway if elected. New Governments often adopt revenue enhancing law changes when elected so they get the revenue and blame the former Govt.

The proposed law will require property deductions may only be claimed from the date of a compeltions and occupancy certificate OR when available to rent. All past deductions under Steele's case etc would be excluded as deductions from that date. The construction phase is the problem period.

Up to now its a very common deductions for interest on a borrowed deposit or to fund construction etc provided intent is to rent at a later date.

This will not apply to a business or commercial property. And isolated profit making is not a business. One note of caution most media refers to ""land"". Land is caught by the rules but all property activities are trapped including those with vacant land. Not just land devs. eg buying land, build a duplex, knock down rebuild for a IP.

Interest deductions to be denied for holding vacant land - These rules are not just confined to vacant land. The title can be misleading.