I'm expecting a large tax refund? - should I use this to pay down part of my investment loan?

October 10, 2014
Catherine Rutherford

While I generally recommend using a lump sum like a tax
refund or mid-year bonus to pay down your home loan, the
situation is a bit different for investors.

 

For home owners, the loan interest isn’t tax deductible so it
makes good financial sense to pay off the loan sooner. As a
landlord however you can usually claim the loan interest as
a tax deduction, and this removes the urgency to pay off the
loan sooner.

 

That said, using the money to complete some
minor improvements or any repairs on a rental property
can enhance your tax deductions through depreciation or
maintenance expenses. It’s a way of using this year’s tax
refund to beef up next year’s tax refund – though always
speak with your accountant for tailored advice.

 

Posted in: Property investment

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