If you have a loan that is shared between multiple properties or includes a personal component, you can set up split bank rules to automatically allocate interest based on the designated percentages.
Step 1: Determine the Allocation Percentage
To ensure interest deductions are claimed correctly, calculate the percentage of the loan assigned to each property or personal component. This is done by dividing the amount allocated to each property (or personal portion) by the total loan amount.
Example Calculation:
Suppose your loan is structured as follows:
Property A: $150,000
Property B: $450,000
Personal Component: $20,000
Total Loan: $620,000
The percentage allocation is calculated as:
Property A: ($150,000 ÷ $620,000) × 100 = 24.19%
Property B: ($450,000 ÷ $620,000) × 100 = 72.58%
Personal Component: ($20,000 ÷ $620,000) × 100 = 3.23%
Step 2: Apply Split Bank Rules
After determining the correct allocation percentages, you can set up split bank rules to automatically distribute loan repayments across your properties while ensuring the personal portion is excluded from tax deductions.
How to Set Up Split Bank Rules
Create the First Rule (Property A)
Navigate to the bank transaction for any interest payment.
Click ‘Create Rule’.
Complete the fields, selecting Property A.
Tick ‘Apply rule automatically’ at the top.
Tick the ‘Split’ checkbox at the bottom.
Enter the allocation percentage: 24.19%.
Save the rule.
Create the Second Rule (Property B)
Go to the ‘Bank Rules’ tab.
Click ‘Create Rule’ again.
Use the same conditions as the first rule, but select Property B instead.
Enter the allocation percentage: 72.58%.
Save the rule.
Create the Third Rule (Personal Component)
Click ‘Create Rule’ again.
Select a Personal Category for the non-deductible portion.
Enter the remaining percentage: 3.23%.
Save the rule.
Once all rules are set up, the system will automatically allocate interest payments based on the specified percentages, ensuring accurate tax compliance.
Helpful Tips:
✔ Ensure the total allocation equals 100% – This ensures the bank transaction is fully processed without discrepancies.
⏳ Allow time for processing – After creating the rules, the system may take a minute or two to locate and apply them.
🔄 Refresh, but don’t confirm manually – If the allocation doesn’t appear immediately, refresh your browser to speed up the process. Do not click ‘OK’, as this may duplicate the transaction.