Use equity in IP to refinance and pay PPOR sooner

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n0ahz0rk
Member
@n0ahz0rk
Join Date: 2004
Post Count: 16
February 27, 2004 - 6:05 am
Hi All,
Say I purchased an IP for 160K today, and somewhere down the track it appreciates to 200K.[] Can I refinance my loan on the IP and borrow the 200K against it, putting the difference (40K) into my PPOR loan ?
And will the interest on the refinanced IP loan be fully deductible ?[]
Thanks in advance!
Andrew.
yack
Member
@yack
Join Date: 2003
Post Count: 1,206
February 27, 2004 - 6:11 am
No. The purpose of the $40k borowings is for your PPOR which is not for income producing purposes therefore not tax deductible.
n0ahz0rk
Member
@n0ahz0rk
Join Date: 2004
Post Count: 16
February 27, 2004 - 6:21 am
Thanks[V]…
Can I use it as a deposit on another IP and make it deductible ?
yack
Member
@yack
Join Date: 2003
Post Count: 1,206
February 27, 2004 - 6:26 am
YES
yack
Member
@yack
Join Date: 2003
Post Count: 1,206
February 27, 2004 - 6:30 am
YES. The purpose is for income producing purposes
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
February 27, 2004 - 7:03 am
If your IP appreciates to $200,000, you cannot borrow $200,000 against it, but only 80 to 90%.
There is nothing stopping you puttting htis extra money into your home loan. However the interest on this portion would be be claimable as it relates to personal expenses.
You could use this money as deposit on another IP, but only the interest portion would be deductible.
Terryw
Discover Home Loans
North Sydney
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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