Private ruling: Interest deduction
Date of advice: 18 October 2018
Published: December 2018
Ruling period: Year ending 30 June 20xx | Year ending 30 June 20xx | Year ending 30 June 20xx | Year ending 30 June 20xx | Year ending 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Will your interest expenses be deductible when you start renting out your main residence? | A1: Yes. The interest expenses you will incur relate to a rental property and will be deductible. Further information about rental property expenses can be found by searching 'QC 55249' on ato.gov.au

Relevant facts and circumstances: Your spouse owns property (the Property) which is their main residence. Your spouse owned the Property prior to them becoming your spouse. Since becoming spouses you have made the Property your main residence. You plan to take out a loan and purchase half of the Property from your spouse. The purchase will be made based on a market valuation of the Property. Your spouse and yourself then intend to purchase a new main residence keeping the Property as an investment and renting it out.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997