Hi guys, I need some help in working out how to pay some reno bills from my split. I own 50% of an IP together with my brother owning the other 50%. We are currently getting DA plans approved for a renovation and I would like to pay my share of the bills for this venture from my PPOR split, which has been setup to use for investment purposes, rather than using cash. I believe that if I pay the whole amount of an invoice from that account, I'd only be entitled to claim the interest on 50% of the amount? What would be the best way to go about paying all the invoices from this split and to make sure that I can claim the full amount of interest on my share? TIA Mark
Thats a tricky one. You could probably borrow to pay you share of the expense, but this may not be practical in most situations. You could also pay the lot and be reimbursed by your brother for his share and the pay this back into the loan. Assuming it is not mixed this may be the best option.
Ensure that the borrowed funds are used to directly pay the expense. Its possible you can claim a deduction for your specific loan interest and if your bro also borrows and directly pays his share he may claim his interest deduction. If your brother gives you cash etc and you pay 100% only 50% of the interest is deductible. Reimbursement erodes the deduction for the interest
Thanks Terry and Paul. I knew it wasn't quite straight forward as I was hoping. My split only lets me withdraw funds to a nominated account. If I were to withdraw the exact portion of my share for each bill, and pay it directly and immediately from that nominated account, would that be sufficient? TIA
see Tax Tip 1: Parking borrowed money in an offset account https://propertychat.com.au/communi...ing-borrowed-money-in-an-offset-account.1313/
I would ensure you link the loan to a bank account with no other funds (savings or offset) if you do that ie To pay $5K move $5k from loan to that linked account with maybe $0.01 in it then pay it.
