Private ruling: Deductibility of interest expenses
Date of advice: 9 June 2017
Published: October 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are the interest expenses deductible? | A1: Yes. The deductibility is determined by the use of the borrowed money. If the money is used to buy income producing property, the interest expense is an allowable deduction.

Relevant facts and circumstances: Your spouse owned a property (property A) in which you both lived; it was your primary place of residence. You and your spouse moved out of property A and purchased another house and moved into that (property B). Your spouse transferred property A to you under the 'Natural Love and Affection’ clause for a sum of money. You took out an investment property loan in your own name for the exclusive purpose of acquiring the property. The loan funds are not used for any private purpose. Property A is being let through a property manager at commercial rates

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