Claiming Interest Expenses

I have an investment property on the NSW south coast. I had permanent renters for 4 years and after the last one the property was so badly damaged I had to take it off the market and undertake a major refurbishment. I did this on weekends for 6 months and stayed at the property while undertaking the refurbishment work. Does anyone know how the ATO views an owner staying at the property and if it is considered personal use. I have spent hours on the ATO website and cannot find any information. If anyone can advise me of an ATO publication dealing with this ia would be pleased.

Hi,

This post belongs in Accounting & Tax.

Where you are rectifying wear and tear incurred during the term YOU rented out the property then you can claim deductions for non-capital expenses.

Check out TR 97/23 for a definition of repairs.

Such costs can include travel and accomodation to carry out those repairs.

Interest remains deductible where the property is off the market to effect repairs.

Where the sole purpose of staying at the property is because you are far from home and it is required to stay overnight out of practicality, then you could argue that interest should still be fully deductible.

Reasons the ATO could argue no or only partial interest deductions could be either you are readying the property for sale, or use as a PPOR or you have an ulterior motive for staying at the property.

You should have a more detailed discussion with your Accountant to see what is reasonable in your case.

Cheers,

Rob