If we move to a new home and rent out our existing one, can we
claim the interest from the investment property as a tax deduction?
Q.
My wife and I have a home loan with an available redraw of
approximately $30,000. In the next five to ten years we are hoping
to buy a bigger place to move into. When we move we would like to
keep our current home and rent it out as an investment property. If
we do this will we be able to claim the interest from the
investment property as a tax deduction?
A.
No you cannot because the new loan would not be for investment,
it would be for private purpose. A better option may be to sell
your home free of capital gains tax when you move to maximise your
deposit on the new home. You could the borrow 100% of the purchase
price of an investment property using a home equity loan. This loan
would be totally deductible.
Each week financial advisor Noel Whittaker answers your
questions.
