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Edited version of private advice
Authorisation Number: 1052307172927
Date of advice: 18 September 2024
Ruling
Subject: Rental deductions
Question
Are you entitled to a deduction for the loan interest on the construction of a rental property prior to it being available for rent?
Answer
Yes.
Based on the information provided to the Commissioner you can have a deduction for the interest on the loan used to construct the rental property.
You have a loan to construct a rental property.
The interest on the loan relating to the construction of the rental property is an allowable deduction under Section 8-1 of the Income Tax Assessment Act 1997.
Section 26-102 of the ITAA 1997 does not prevent you from claiming a deduction for the interest on the loan used to construct the rental property.
This ruling applies for the following periods:
Year ended 30 June 2024
Year ending 30 June 2025
Year ending 30 June 2026
The scheme commenced on:
1 July 2023
Relevant facts and circumstances
You purchased a block of land.
You commenced building a residential rental property on the land in the year after it was purchased.
The expected completion date of the property is a few years after construction commenced.
You intend on renting the property out once completed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 26-102