Essay on Application Of The Local Estate Agent Service
What can Dr John claim?
Some of those expenses can be claimed as deductions.
According to section 8-1 ITAA 1997, expenditure on the interest of the loan is deductible to the extent that the money from the bank is used for the purpose of generating income or is necessarily incurred in carrying on a business for the purpose of producing assessable income. Due to the fact that Dr John borrowed money from the bank to purchase his rental property, this means he is eligible to claim his expenditure he paid for the interest loan. In this case, he used $500,000 of the loan to buy a house which is intended to produce him income. He can claim 5% out of $500,000 as a deduction.
For a deduction to be allowed under the positive limb of subsection 8-1(1) of the ITAA 1997, the expenditure must be relevant in the sense of having the essential character of expenditure incurred in the course of gaining or producing assessable income.
In accordance with section 25-25 (3) ITAA97, it is essential for Dr John to notice that he cannot claim any loan interest if the money is used for personal…