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Edited version of private advice
Authorisation Number: 1051526355187
Date of advice: 5 June 2019
Ruling
Subject: Deductions for interest on investment property loan
Question 1
Will the interest on Loan A be deductible once the loan has been paid down and redrawn, and the redrawn funds used to pay down Loan D?
Answer
Yes.
The interest expenses you incur relate to your rental property and are deductible. Further information about rental property expenses can be found by searching 'QC 55249' on ato.gov.au
Question 2
If paying down Loan D the money redrawn from Loan A was placed into an offset account against Loan D, would the interest on Loan A be deductible?
Answer
Yes.
The interest expenses you incur relate to your rental property and are deductible. Further information about rental property expenses can be found by searching 'QC 55249' on ato.gov.au
This ruling applies for the following period:
Year ending 30 June 2020
Year ending 30 June 2021
Year ending 30 June 2022
Year ending 30 June 2023
Year ending 30 June 2024
The scheme commences on:
1 July 2019
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You jointly have the following property loans:
Loan A principal and interest loan
Loan B principal and interest loan
Loan C principal and interest investment loan
Loan D interest only loan
Loans A, B & C are secured against your main residence and loan D is secured against the investment property.
Interest on Loan A the loan relates to your main residence.
Loans B & C relate to the investment property.
Loan D relate to the investment property.
You have $XX cash.
You intend to pay down Loan A and immediately redraw and pay amount into Loan D. The balance of Loan D will then be $XX after payment from redraw.
Loan A facility will then be used for the sole purpose of the investment property.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1