Is the interest of a refinanced rental loan tax deductible?
Question from Emma Zhang updated on 6th December 2007:
I am thinking of refinancing our rental property and use the money to pay off part of the mortgage on our own house. Will the interest of the increased loan on the rental property be tax deductible? Your help will be most appreciated.
Our expert responded:
The short answer is 'it depends'. There is a process to go through to determine this, and one that can't be 'shortcut'. It will mostly depend on how much the rental property has increased relative to your purchase price (and mortgage). Make sure you see an accountant who specialises in property in order to ensure it is done correctly.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.
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