Property A = Investment
Property B = Future PPOR

Property A has 2 loans against it.
Loan 1 = $150,000
Loan 2 – $58,000

Assuming loan 1 is associated with the purchase of the property the interest on this loan will probably be deductible.

But loan 2 was borrowed to pay into PPOR. So the interest on this loan is not deductible – actually it may be now that the house is rented but won't be once you move in.

Since this is on big loan you would need to apportion the interest.

Total loan is $208,000 so
Loan 1 = 150,000/208,000 = 73%
Loan 2 = 58,000/208,000 = 27%

So assuming this is an interest only loan only 73% of the interest will be deductible once you move into property B.

Only a portion of the interest may possibily be deductible.

Can u give a description with amounts of what happened/?

Sounds like you have set up the loan in a less than ideal fashion.

If you are going to rent the place out then I suggest you look at not paying the loan down and instead change to an IO loan with a 100% offset account.

The reno loan could be consolidated into the main loan as long as none of it was used for non property related expenses there will probably be no tax issues.

Hi Duckster

An option contract would not cost $8800. That is extremely on the high side! Maybe you put an extra 0 in by mistake.

Move in again as your main residence.

You must actually move in to reset the clock and you may need good evidence to prove this if challenged or audited. There is no minimum time period in the legislation either.

If you rent it to tenants and they move out and you wait 2 months then move in it would only be your main residence from that 2 month period. This is unless you had lived their prior to the tenants moving out. If was your main residence and the tenants had lived there for exactly 6 years and then you waited 2 months to move in then there may be issues as the property had earned income. The legislation isn't clear on this, but ATO publications suggest that the first 6 years would be CGT free but the next 2 wouldn't.

You do need equity to set up a LOC. Max LVR is around 80% usually, some 90%

So if you had a property valued at $100,000 and a loan of $90,000 you could not get a LOC.
But if you had a $50,000 loan then you could get a $30,000 or a $40,000 LOC depending on the bank etc.

A LOC is new borrowings, but undrawn initially.

You claim them in the year they are incurred.

If you mean where on the forms it would be on the investment property schedule.

To set up a LOC you need equity

If they are the lender then they would actually be the mortgage manager, This would mean the loan is mortgage insured no matter what the LVR. This may not be a concern but if you are aiming for multiple properties it could restrict you.

Rates will depend on the size of the loan some majors around 5.85%

Also you could do this on your own too.