Loan for PPOR equity for extension, then rent out? Tax deductible...

Discussion in 'Loans & Mortgage Brokers' started by Alemilyx, 27th Dec, 2017.

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  1. Alemilyx

    Alemilyx Active Member

    Joined:
    23rd Sep, 2017
    Posts:
    26
    Location:
    QLD
    We have recently purchased a PPOR and have put down a 20% deposit. We have another 20% of the house value sitting in an offset account of an investment property, which we will move across to our PPOR to reduce our mortgage cost and maximise gearing benefits on the investment.

    We can see this being our 'forever house' due to the location, design and lifestyle features of the area. However we are planning to have a 'living/working holiday' overseas for about 18 months in the next 2-3 years time (dual citizen makes this possible). The location this house is in has very few rentals generally available and the return on rentals is quite good.

    My question behind all of this back story is:
    1. If I was to get a building/renovation loan against the house whilst it was our PPOR to significantly extend/renovate the house, would this loan then be considered 'tax deductible' once we decided to rent it out during our time overseas?
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Yes the interest on that loan could be deductible once the property is available for rent.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)

    Im not a tax guy...............

    Id say yes.

    The borrowing is a capital cost that helps to increase or maintain the income

    tarolf