You are allowed to claim 100% of the interest incurred on the loan used to purchase the investment property, even though the loan is in joint names with your spouse. The fact that the loan is in both names does not prevent you from claiming the full interest as a rental property expense.
As a general rule, rental income and expenses should be reported in the tax return of the legal owner of the property—that is, the person whose name is on the property’s registered title. According to Taxation Ruling TR 93/32, rental property income and expenses are normally split between the owners based on their legal interest in the property. While the outcome can differ if equitable interests in the property are different from the legal interests, the ATO generally assumes that legal and equitable interests are the same when the parties are related, such as between spouses.
Although clear public guidance on this specific scenario is limited, there have been private rulings where the ATO allowed one spouse to claim the full deduction for interest expenses, even when the loan was in joint names. This was typically permitted because the borrowed funds were used solely to acquire an income-producing asset held by that spouse. However, it’s important to note that private rulings issued to other taxpayers cannot be relied upon as a precedent for your situation.
In summary, you should be able to claim 100% of the loan interest on your rental property, as you are the sole legal owner, and the loan was used entirely to purchase the income-producing investment property.
Reference – https://community.ato.gov.au/s/question/a0J9s0000001DwwEAE/p00029929
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on our website, Investax Group, its officers, representatives, employees and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
