It’s quite common for investors to use an equity loan to fund the deposit and stamp duty when purchasing an investment property. Often, the property isn’t rented out immediately prompting one of the most frequently asked questions: Can I still claim the interest on my equity loan as a tax deduction?
The short answer is: Yes—provided the borrowed funds were used to acquire the property, and the property was genuinely available for rent after settlement.
Here’s how it breaks down:
- Before Settlement (e.g. for deposit and stamp duty): If the equity loan was used to cover the deposit, stamp duty, legal fees, or other upfront acquisition costs, the interest on those funds is generally deductible. That’s because the purpose of the borrowing was to acquire an income-producing asset—even if the rental income hadn’t started yet.
- After Settlement but Before Tenancy: As long as the property was genuinely available for rent (e.g. advertised at market rent with no unreasonable restrictions), the interest continues to be deductible—even if a tenant hadn’t moved in yet.
📝 Important: Keep accurate records of when funds were used, what they were used for, and when the property was first made available for lease to support your claim.
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