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Mortgage Interest correction - Mary Holm

Q. ...You wrote: "Note, too, that your mortgage interest won't be tax deductible against your rental income. That's because, when you originally borrowed the money, it was to buy your home, not an investment property." What does that actually mean?

I nearly fell off my chair when I read it, and I am still tempted to pick up the phone and put my tenants on the street.....

Monday, September 22nd 2003

r> A. Time for sound sleep, and sweet dreams about tenants also snug in their beds.

I got it wrong. And many other people, including those who have informed me about this issue in the past, apparently also misunderstand the situation.

Let's start with the basics. If you borrow money to make an investment that will produce taxable income - whether the investment is in a rental property or shares or emus - the interest is tax deductible. But if you borrow to buy your own home, the interest is not deductible.

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