What is the tax consequence

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Question - Stephen and Caroline Harris are married and live in Melbourne. They jointly own a townhouse in Hawthorn which is rented to tenants and generated $35,000 rental income at the end of the 201W/1X income year. By 30 June 201X, they had paid $5,500 in interest associated with apartment's mortgage and had also spent $2,500 fixing the bathroom's plumbing system. Real estate management fees amounted to $4,700 and were paid in the current income year.

As Caroline is not currently working, they decided to split the profits at a rate of 75% for Caroline and 25% for Stephen. If there are losses, they agreed that Stephen is to take 75% and Caroline would take only 25%.

Required - What's the tax consequence of $5,500 interest associated with apartment's mortgage?

Reference no: EM132561792

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