Refinancing PPOR

[stargazerParticipant@stargazerJoin Date: 2002Post Count: 344]

February 6, 2005 - 4:48 pm

Hi all

I have a question it may have been asked before?

If the idea is to change your existing PPOR to an IP.

So PPOR value 300000 owe 150000….LVR 50%(current)

If one refinances to 80%
So PPOR value 300000 @ 80% =240000

Would the interest on the 240000 loan now be claimable because it is now an IP.

You keep the 90000 and purchase another PPOR.
or
You purchase another IP

Could someone explain how this works when you have a low LVR in your PPOR but want to
-Put the equity to work
-gain the tax deductible eligiblity.

cheers
stargazer

[Mortgage HunterParticipant@mortgage-hunterJoin Date: 2003Post Count: 3,781]

February 6, 2005 - 9:15 pm

The new amount borrowed is only deductible where it is used to purchase income generating assets.

Simon Macks
Interest Free Home Loan Agent
[email protected]
0425 228 985

Please email me rather than using the PM service here.

Fully Accredited With Derivex LTD and IFHL PTY LTD

***Ask about our Interest Free Home Loan***

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

[kinkso0o0oMember@kinkso0o0oJoin Date: 2004Post Count: 61]

February 7, 2005 - 12:46 pm

Originally posted by stargazer:

You keep the 90000 and purchase another PPOR.
or
You purchase another IP

Just to followup from Simon, if you use the 90K to purchase another PPOR, No, you cannot claim the interest.
However if you use the 90K to purchase a IP, Yes, you can claim the interest.

I had the same problem unfortunetly and have a fair bit of equity in my old PPOR but buggar all in my new PPOR. I see it as a lesson learned.

In theory, there is no difference between practice and theory, in practice, there is….

[stargazerParticipant@stargazerJoin Date: 2002Post Count: 344]

February 7, 2005 - 2:27 pm

Hi

Thanks for the replies.

So to follow on
the 150000 loan interest would become deductible

and if the 90000 used to buy IPs then this interest would be deductible.

If used to buy PPOR then interest would not be deductible.

So if a person has alot of equity in PPOR and refinances makes PPOR into an IP and buys IPs with money left over and rents a property for themself this then makes a non deductible debt into a deductible debt.

Am i correct in this.

Cheers
SG