Private ruling: Rental property interest
Date of advice: 4 July 2017
Published: November 2017
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2017

Ruling: Q1: Where you redraw an amount from your home loan to use towards purchasing an investment property will interest on the amount be deductible? | A1: Yes Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature. At paragraph 22 of Taxation Ruling TR 2000/2 the Commissioner states that the deductibility of interest on a further borrowing of money under a redraw facility depends on the use to which the redrawn funds are put. If this is for an income producing purpose then the interest on the redraw amount is deductible. You intend to use the redraw facility on your loan for income producing purposes. Accordingly, the interest you incur on the redrawn amount will be an allowable deduction.


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


Relevant facts: You intend to redraw funds from your home loan to use to purchase an investment property.