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Purchasing a New Property

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  • Purchasing a New Property

    Scenario: Currently own/occupy my own house, which is freehold. Looking to purchase a larger/nicer house, and rent out the old one. To do this I will need to take out a mortgage for most of the value of the new property.
    Question: Can the debt be structured so that it is tax deductible?

  • #2

    Set up a company - LTC or similar depending on your situation that will "own" your old home (rental)
    Then interest becomes business expense and tax deductible.

    Get a good accountant to advise you mate.


    • #3
      As above, yes, but it needs to be done right.

      The structure you use depends on your circumstances and I suggest you get professional advice about this.

      First, is your old home a good rental? What is the profit (rent less expenses) going to be? I find that a number of clients go ahead with this kind of set up, without really thinking it through. Often it is better to sell your existing house and buy another rental, that really suits your needs.

      Most peoples current houses, turned into a rental, run at large losses, even with low interest rates. For most investors this is NOT a good scenario, and not ideal for them going forward.

      Book a free chat here
      Ross Barnett - Property Accountant


      • #4
        Yes, it can certainly be done more or less as you desire. There are fish hooks, to be sure.
        However, it's the 'audit trail' that counts in the event of any close examination by IRD.