Private ruling: Deductions for interest on investment property loan
Date of advice: 5 June 2019
Published: July 2019
Ruling 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
Date scheme commenced: 1 July 2019

Ruling: Q1: 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? | A1: 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 | Q2: 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? | A2: 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

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