Interest deductability

Question from jeff updated on 20th April 2018:

I'm using a line of credit secured against investment properties to pay for expenses (ie: rates, insurance premiums, repairs, etc) on these investment properties. My understanding is that I can claim interest deductability for the loan interest created by these expenses. Am I correct ?

Our expert Mark Withers responded:

Probably. In general terms you will meet the nexus test for deductibility if you borrow to pay costs related to an asset that is deriving taxable income. My only hesitation is that revolving credit accounts are often used to deposit private funds as well and meet private expenditure. If your account has a mixture of private money flowing in and out alongside the business expenditure you may not be able to deduct all the interest.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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