I’m sure this is straight forward but I’m not sure how to go about it.
We want to move out of our house into something a little newer on a smaller block but dont want to sell our existing house.
We have about $500k equity in this house and owe $200k to the bank.
Would like to transfer the equity into the new house as this will be our principle place of residents.
Hi Paul,
Couple of quick ideas.
1. find out how much your current home would rent for and get a capacity test done to see how much a lender will allow you to borrow against.2. Rent your house out and secure a property like you are looking for with a lease option.
Thanks
KiwiHi Paul,
It is possible to borrow against your present property to buy a new property. You have plenty of equity but the question is , do you have the earning capacity to repay?
As Kiwi said, work out what rent you would get and speak to a mortgage broker to find out what you are able to borrow.
If you rent out your old place the interest on the 200K becomes tax deductable. I have a feeling that you might be asking to borrow more against the $500k housse to increase deductions. This is a tricky area and you need to speak with a good accountant about it.
Good luck with your endeavours,
Sue [biggrin]“Be careful not to step on the flowers when you’re reaching for the stars”
If your asking how to ‘move’ equity for tax reasons, then it can’t be done.
Tax deductibility depends on purpose. If you increase the loan on the existing property so you can pay for a new PPOR, then, unfortunately, the extra interest on the increased loan won’t be claimable.
The best bet would be to change the existing loan to IO and pay the minimum off this, and any extra money go into the new loan for the new PPOR.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
terry is correct about the tax situation . i would suggest sell your house it is CGT free i would imagine if it has only been your principle place of residence. draw up a line of credit on your new home and reinvest that way, it is far more clear cut. check what your accountant thinks (not always a wise move especially if they are 60 and still working?). it is not wise to have a “messy” tax lodgement that could fall under scrutiny.
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