How can I make mortgage payments tax deductable?
Question from Anonymous updated on 22nd May 2009:
I moved two years ago and the property is tenanted. I believe I cannot claim tax on my mortgage payments as I used to live in this house. I have heard that one can get around this problem by selling the property.
The home was already sold to the Trust while I was living there. The mortgage and payments are in my name. How can I make the mortgage payments tax-deductable?
Our expert Mark Withers responded:
You have a significant mis-conception here. The fact that you used to live in the home is not relevant to the deductibility of the interest. Provided you can accurately establish that the loan was used to purchase the property the interest will be deductible along with all the other holding costs from the point it was made "available for rental".
If however the property is in trust the interest may well be deductible only to the trust rather than to you personally. It may also be appropriate to redocument the loan into the trust so that it is aligned with the property ownership but you probably need to begin by reviewing the documentation with your lawyer to determine what the trust has acknowledged it owes you.
Kind Regards Mark
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.