Mortgage Interest
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Tax dedications can save you a lot of money at the end of the financial year, so it’s important to know what’s eligible and what’s not.

The good news is that parts of your mortgage payments could qualify as tax deductions! Learning how this works can provide you with the knowledge you need to save as much as possible and continue building your personal wealth.

Is mortgage interest tax-deductible? Here’s everything you need to know.

Eligible mortgage deductions

In some cases, it is possible to claim the interest charged on your home loan when you complete your tax return.

However, this is only the case if you are using your property to earn an income, either by renting it out or by using residential property for business purposes, including a home office.

Your home equity loan may also be tax-deductible if you use this loan to buy, build, or improve the home acting as the loan’s security.

When mortgage interest isn’t deductible

Sometimes, mortgage interest is not tax-deductible. Knowing when this is the case is essential, as it allows you ensure you’re filing taxes accurately and in line with the legal requirements put in place by the Australian Taxation Office.

Your mortgage interest will not be tax-deductible if you use your loan for a private purchase (other than purchasing a home) or if you refinance an investment loan for another purpose, such as buying another property.

Mortgage interest will no longer be deductible if you stop making an income from your property. This includes investment properties that are no longer earning rental income or that you move into as your primary residence. You cannot deduct your mortgage interest if you stop using the property for business purposes.

How to check your eligibility

Sometimes, determining whether or not your mortgage is tax-deductible can be challenging, or it may be difficult to find out how much you are able to claim back on your tax return.

If you are unsure about the tax deductions you are able to make, it’s best to talk to a qualified tax professional. They can advise you on what deductions are possible and how to claim these legally and effectively.

Is deducting mortgage interest a good idea?

Mortgage interest tax deduction can be an effective investment strategy for home owners, with this approach often working as part of negative gearing.

It’s important to remember that even when mortgage interest is tax-deductible, principal home loan repayments are not. This means that any deductions will only apply to the interest amount, not the total amount you pay to your lender.

Over time, making the most of all possible tax deductions can make a big difference to your bottom line, saving you a lot of money off your taxes. This can provide you with more control over your finances and may even mean that you are able to invest money in more property!

Talk to an experienced professional who can help you navigate your mortgage with confidence! Contact the team at Our Top 10 to find the best mortgage broker Sydney has to offer.

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