Join our investing community

Can I Borrow From Family For Shares + Claim Tax Deduction?

Discussion in 'Investing Strategies' started by Kipps, 21st Aug, 2009.

  1. Kipps

    Kipps Member

    Joined:
    21st Aug, 2009
    Posts:
    6
    Location:
    Melbourne Viv
    In Australia, I was wanting to borrow $100k from family at say 10% p.a. to buy shares (like you would a margin loan). This would generate $10,000 a year in interest payable to the person I borrowed the money from. Am I able to deduct the $10,000 interest from my taxable income as is the case with a bank offered margin loan or can I not deduct this $10,000 from my taxable income as it's not from a bank? Thanks!
     
  2. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    Please note that I not am accountant .... and this is not advice etc etc :)

    but my understanding is that if the rates are at a "commercial rate" of interest than this is acceptable. For example, I have used a standard home loan rate (say RBA indicator rate, or the CBA rate) + 2% (as it is a non secured loan).

    However you should make sure there is a formal loan agreement signed by both parties.

    Regards,

    Jason
     
  3. Kipps

    Kipps Member

    Joined:
    21st Aug, 2009
    Posts:
    6
    Location:
    Melbourne Viv
    Thanks Jason. Any other opinions would be warmly welcomed :)
     
  4. Smartypants

    Smartypants Well-Known Member

    Joined:
    2nd Jun, 2006
    Posts:
    226
    Location:
    NSW
    Hi Kipps.

    My advice is to seek out an opinion from an accountant before preceding with anything like this
     
  5. Kipps

    Kipps Member

    Joined:
    21st Aug, 2009
    Posts:
    6
    Location:
    Melbourne Viv
    Of course but I didnt feel like spending $500.00 on an accountant opinion if its obvious it cant be done, hence asking for preliminary views here first.