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 interest incurred on an investment loan prior to the property being genuinely available for rent?

1 Yes. Based on the information provided to the Commissioner you can claim a deduction for the interest incurred on an investment loan for a property prior to it being rented. The Commissioner is satisfied it was your intention from the purchase of the property to rent it out and you carried out the repairs to make it habitable and to obtain a higher rent. The property is not being used for any private purposes. You can claim the interest on the loan as a deduction under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) up until the property was available for rent. Now that the property is rented and has been available for rent you can claim all other allowable deductions under section 8-1 of the ITAA 1997. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: 1 July 20XX

You purchased the property as an investment property. Contracts for the property were exchanged and the property settled in a previous year. You obtained an investment loan and were required to have a rental assessment for this loan prior to it being approved. You received a rental appraisal for the property. The property was purchased with defects which are mostly capital in nature. There were numerous defects. The renovations were completed, and the property was available for rent through a Real Estate Agent. You rent the property for an amount per week. The property has not been used for private purposes.

Income Tax Assessment Act 1997 section 8-1