| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1051243332046
Date of advice: 4 July 2017
Ruling
Subject: Rental property interest
Question
Where you redraw an amount from your home loan to use towards purchasing an investment property will interest on the amount be deductible?
Answer
Yes
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.
At paragraph 22 of Taxation Ruling TR 2000/2 the Commissioner states that the deductibility of interest on a further borrowing of money under a redraw facility depends on the use to which the redrawn funds are put. If this is for an income producing purpose then the interest on the redraw amount is deductible.
You intend to use the redraw facility on your loan for income producing purposes. Accordingly, the interest you incur on the redrawn amount will be an allowable deduction.
This ruling applies for the following periods
Year ending 30 June 2018
Year ending 30 June 2019
Year ending 30 June 2020
Year ending 30 June 2021
The scheme commences on
1 July 2017
Relevant facts
You intend to redraw funds from your home loan to use to purchase an investment property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
