Is interest tax deductible on a private loan?

[Auckgal]

Here’s the situation. My Mum has money in the bank earning super low interest. I have lots of mortgages at 4.5-4.8%. So we are considering doing a private loan (documented legally) at a rate beneficial to us both.
Does anyone have experience with private lending for investment properties and whether it is still tax deductible?

[Rosco]

Hi,

It depends on the purpose of the loan, but in general if was deductible for your rentals, then if you refinance from bank to your mum, then will still be deductible.

1) Watch break fees and I would ask your bank for a quote

2) You will have to deduct Resident Withholding Tax (RWT) if over the threshold. $5,000 interest per year of the top of my head

3) Your mum will have to pay tax on the interest received

Ross

[Auckgal]

Thanks Ross, appreciate the time taken to reply!