Section 386 — Income Tax Act 2007: Loans partly meeting requirements

Loans partly meeting requirements 386 1 If, at the time a loan (“the mixed loan”) is used, only part of the mixed loan is a loan to which any of the provisions specified in section 383(2) apply, for the purposes of this Chapter that part (“the qualifying part”) is treated as a loan to which the provision in question applies.

2 Accordingly, the corresponding proportion of the interest on the mixed loan is eligible for relief.

3 If a mixed loan is partly repaid, for the purposes of this Chapter the corresponding proportion of the repayment is treated as repaying the qualifying part (but see section 406(5)).

4 In this section “ the corresponding proportion ” means the proportion that the qualifying part bears to the whole of the mixed loan at the time the mixed loan is used.