Capitalising Interest and Non working spouses I am a big advocate of couples not jointly buying property together as there are a heap of strategies that can be used. One strategy may be to borrow to pay the interest of an investment property while the owner is not working. This may be when the children are born/young for example. Where a couple jointly own an investment property the opportunity will be lost as the other spouse will be left to foot all the interest. But where one person is owner and they have no other income then in may (and I say MAY) be ok to borrow to pay the interest. This will mean that funds that would have been diverted from paying down the PPOR loan can be used to pay off the non deductible debt faster. It will also mean that the owner of the IP will have higher deductions - which won’t help when they are not working but any losses can be carried forward and be offset by future income when it is incurred. Also when the non working spouse does return to work they will have a higher loan balance which will mean further ongoing deductions. You will probably need to see your lawyer or tax agent to get a private ruling to do something like this.