QUESTION:
My father and I own, as joint tenants, the property he lived in before recently moving into an aged care home. I took out a loan, with the property as collateral, to pay the aged care bond. The property will soon be rented out, and I have received conflicting advice on whether the loan interest will be tax deductible. Can the interest be offset against any rental income, and how will this affect the Centrelink family tax benefits we receive? Can you please provide some general advice on this topic.
ANSWER:
Interest on a loan for an aged care bond will not be deductible, as the bond is not producing interest. Remember, it is the purpose of a loan that decides whether the interest is tax-deductible.
