Debt recycling

Hi

What if there shares sold for under what you paid for them you would have a capital loss would you still need to put back into the INV. loan and not Non Deductible debt.?

Say you had a LOC for Investment with $50,000 limit. You borrowed $30000 to buy shares and say you lost the lot. Do you ever need to repay that $30,000 or can you still keep claiming the interest even though the investment went sour.

Cheers
BC

 

The interest deductibility occurs due to the connection with gaining your assessable income, but does not have to be incurred in the same year as the income.

There have been cases where people have ceased a business and been able to claim interest in subsequent years on outstanding debt.

They have subsequently been able refinance to obtain better repayment terms to ease the burden, but where refinancing is for other reasons the connection with gaining your assessable income MIGHT be lost if it seems mixed purpose or non-commercial.

Where you continue investing activities in spite of some losses then there should be less restrictions, but ALWAYS check with an Accountant about your specific situation.

Cheers,

Rob