TR 2000/2 Interest Deductibility
ATO ruling on when loan interest is deductible — purpose of the loan matters, not what secures it.
Definition
Tax Ruling TR 2000/2 is the ATO's definitive guidance on the deductibility of interest expenses. The core principle: interest is deductible based on the purpose for which the borrowed funds are used, not the security (which property is mortgaged). If you borrow to buy an investment property, the interest is deductible — even if the loan is secured against your home. Conversely, if you redraw from an investment loan for personal use, that portion of interest becomes non-deductible.
Related reading
Related terms
Mixed Purpose Loan
A single loan used for both investment and personal purposes — splits the interest deduction.
Offset vs Redraw
Offset preserves your deduction; redraw can taint it. They are not the same.
Negative Gearing
When your property costs exceed rental income — and you claim the loss against other income.
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