Hi, I cuurently own my PPOR but I have found another place which I want to purchase to live in.Is it possible if I dont sell my property and intend to rent it out to get a loan up to its valuation from the bank and use the money to help purchase the other property? By doing this could I then claim the interest component at tax time if I have rented out my property and the property that I have purchased will have a lot lower loan. How would the tax department view this? The only other solutions are is to sell the property and use the funds to purchase the other property. Rent out my PPOR and cop it at tax time as there will be little allowable deductions and on the new PPOR will be a large loan. Any suggestions or advice will be greatly appreciated.[biggrin]
Martin
Hi Martin,
Your first option (revalue and refinance IP to buy PPOR) will not make the additional funds deductible as the purpose of the new loan/refinance is to buy a non-deductible asset.
Depending upon your financial situation you may be able to convert your existing PPOR loan to interest only and then redirect the funds saved against your new PPOR.
Another option is to sell your existing PPOR (CGT free as it is your PPOR) and use the funds to pay down your new PPOR, refinance and then start reinvesting. In the main however you are better off retaining both properties as this gives you a larger asset base to work from for your future.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Martin,
Another option would involve drawing maximum equity from the IP, deductible debt (previously your PPR) and park this in an offset account against the new PPR loan, non-deductible debt.Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
hi brissy 04
raising a mortgage against an existing ppr to purchase a new ppr is unlikely to effect any tax deductibilities despite previous posts.
you will minimise your raw costs however, and this is a good thing.
Brendan H
Mortgage Broker
Brisbane 07 3240 4815Hi Brendon,
There are Two loans in my scenario,
The First Loan is an investment loan secured against the current unencumbered PPR, (this is deductible debt)The second loan with an offset attached is secured against the new PPR; (this is non-deductible debt)
Funds from loan One (investment loan) are placed in the offset attached to loan Two(non deductable debt)This option assumes Martin intends to acquire more investments in the future.
Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
The ATO looks at the purpose of use to determine deductibility. So with just increasing your loan – what will you do with the money? If it is to buy a new home to live in, then you cannot claim the extra interest.
With Steven’s idea, it may be OK if you can argue that you drew down the extra money with the intention of buying a new property in the near future.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Very good point Terry
You must be logged in to reply to this topic. If you don't have an account, you can register here.
