EV 1052166807536currentnon-binding advice

Rental deductions

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1

Are you entitled to a deduction for the interest on the investment property loan?

2

Yes. Based on the information provided to the Commissioner you are able to claim a deduction for the interest on the investment loan when you withdraw funds from the offset account to purchase a main residence. The nature of the original borrowing has not changed from that of an investment loan. The interest is therefore deductable under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This ruling applies for the following period : Year ending 30 June 2024 The scheme commenced on: 1 July 2023

3

You and your spouse have an investment property. You and your spouse have an interest only loan on the investment property. The loan has an offset account which covers 100% of the loan. There were no interest charges to be claimed against the property in the relevant financial year. Funds are expected to be withdrawn from the offset account to purchase a main residence, which will trigger the resumption of interest charges on the investment property loan. The investment property loan amount remains unchanged at all times (it does not have a redraw facility, and no principal has been paid off to date)

4

Income Tax Assessment Act 1997 section 8-1