Completing your income tax return for interest limitation

When you complete your income tax return, you will need to:

• consider how the interest limitation rules apply to your property
• calculate the total interest on residential property and the amount of interest that can be claimed. 

Total interest on residential property is the total interest incurred on your borrowings on all your residential properties for the year.

You should keep a record of the interest incurred for each of your rental properties. You may be able to claim this amount when the property is sold if the sale is taxable under the bright-line property rule.

The bright-line test

Interest expense claimed is the total interest you can claim on your borrowings on all your residential properties under the interest limitation rules. If you claim interest, you will also be asked to provide your reason(s).

Calculators

If your property is affected by the interest limitation rules use these calculators to help work out your interest deduction.

The property interest phasing calculator allows you to work out how much interest is deductible if you purchased a residential property before 27 March 2021 and the interest is subject to phasing.

Property interest phasing calculator

The new build interest apportionment calculator allows you to work out how much interest is deductible if your property has both a new build and non-new build and you are required to apportion your interest deduction.

New build interest apportionment calculator