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Edited version of your written advice
Authorisation Number: 1012744063807
Ruling
Subject: Interest expenses
Question 1
Will the interest expenses earned prior to the earning of rental income be deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
This ruling applies for the following period:
Income year ended 30 June 2009
Income year ended 30 June 2010
Income year ended 30 June 2011
Income year ended 30 June 2012
Income year ended 30 June 2013
The scheme commences on:
1 May 2010
Relevant facts and circumstances
You purchased a property in X. The name of your spouse was included in the title in X.
You previously resided in the property with your spouse.
In X, you moved out of the property due to a change in work location.
Instead of selling the property you decided to retain the property as a rental investment.
The property required a partial demolition and renovation.
The house and renovations were refinanced with the X in X and the loan is recorded as an investment loan reflecting your intention to rent the property out.
You completed the demolition phase of the renovation yourself.
The builder you had engaged to complete the renovation experienced financial difficulty and terminated the contract in X.
You completed the remainder of the renovation yourself with the assistance of sub-contractors. The project was completed by X and the property was tenanted by X.
Relevant legislative provisions
Income Tax Assessment 1997 Act section 8-1
Reasons for decision