Tax implications for new property

Hi guys,

I have recently purchased my first IP, i am currently in the process of completing the deal.

I am a little confused when it comes to Tax deductions.

For example, i borrowed the deposit and excess funds for the deal against my PPOR so i have all of the funds sitting in a separate mortgage (i understand not to mix these as it will lead to cross collateralisation).

My understanding is that i should take all costs from this or the final mortgage to allow me to claim interest as a tax deduction.

However, my question is, i need to pay for my landlord insurance, should i take this out of the initial loan for the deposit and other fees or should i pay this from my own pocket and claim it as an expense.

If i claim something as an expense can i also claim the interest paid on that as well?

I hope the above makes sense, if not i will be happy to explain further.

Thanks in advance.

 

Time to start reading I think!

 

Yes definitely, I have been reading these forums for a while so i'm hoping i have a good idea of what i'm doing but as it is my first IP there is a lot to take in.

I'll see if i can find some stuff relating to this

 

PAS TV has a 19 part series on rental property tax issues ...Hours of fun if you are having trouble sleeping

 

Thanks Paul, i will watch those over the weekend and should come out with some more knowledge.

 

Thanks a lot for those videos Paul.

They are extremely helpful, i would recommend anyone who is starting out to watch them (as well as reading all of the info here).

So my interpretation now is that in the above scenario i should pay the money not from my loan as i can only claim interest on funds used to acquire the property, not for ongoing costs.

So this will be an expense.

 

And borrowing to pay interest can also be deductible in some circumstances.