Private ruling: Rental deductions
Date of advice: 18 September 2024
Published: 28 October 2024
Ruling period: Year ended 30 June 2024 | Year ending 30 June 2025 | Year ending 30 June 2026
Date scheme commenced: 1 July 2023

Ruling: Q1: Are you entitled to a deduction for the loan interest on the construction of a rental property prior to it being available for rent? | A1: 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.

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