I've just stumbled upon this site today and i wished I knew about it earlier
. I thought I had a good (novice) plan in the works but that seems to be unravelling before my eyes and would appreciate any advise .We ( hubby and me ) currently have a PPOR (propety A) in both our names , we bought it for $430K and have managed to make extra repayments to the amount of $165K and now only owe $127K to date. There was an offset account attached to this loan.
I have an IP (property in just my name ( bought it before we got married) and currently owe about $218K . The grand plan I hatched was to move into the IP (due to personal reasons) and make ( into PPOR and switch (A) to an IP. I would redraw the $165K from A to repay B paying if off in full ie discharge the loan. I was only looking to stay temporary at B (5 – 7 year outlook) and would then like to but a new PPOR (property C) and at this time switch B back to an IP. Being greedy I thought the advantage of my scheme was great coz
1. Property A is an investment and redrawing $165K would increase the loan amount therefore interest expense
2. Be technical mortgage free with Property B for 5-7 years
3. Use the equity in property B to buy a better place and later on still claim interest when it becomes a IP again.However after reading some of the post I seem to have done everything wrong!!
A. i should have not put extra repayments in A and should have instead deposit in the offset account – i'm trying to reverse this now by redrawing the payments to the offset as I have not moved to property B yet.
B. Not consider paying off property B if i intend to make it into an IP again
C. Change my time frame to 6 years and under for CGT reason
D.Overally Very confused ……I was looking to be mortagage free for my PPOR and have a effective negative gear in place but i think I've stuffed it up right on the inset. Any help or advise is appreciated!!
Hi stay_c and welcome
I'm a newbie here too – joined in July. I won't offer you any info as I'm not experienced enough but I just wanted to say that I think you've come to the right place.
Everyone here is very helpful and their knowledge is incredible.
If there's a solution, these guys on this site will give it to you.
I've also visited a few other sites that may be able to help in terms of forum advice – happy to give you their details if you e-mail me.
Cheers
How does this sound…
DON'T redraw on Property A at all – leave it as is.
Refinance property B once it's become your PPoR and use the cash to pay Property A off completely, therefore making it for investment purposes and tax deductible.
Property A will then (presumably) be CF+, contributing positively to your income and helping with your own mortgage on property B. It's not negatively geared but by the same token you aren't paying a whole lot of non deductible interest…At this stage I'd be calling an accountant real quickly – i.e before you start redrawing or transferring anything.
Sorry to be the bearer of bad news but i think you may have an issue and probably need some rehashing of your structures.
Great in theory Refinance property B once it's become your PPoR and use the cash to pay Property A off completely, therefore making it for investment purposes and tax deductible. but it will not be acceptable to the ATO.
Depending on time frames there are a couple of alternative strategies to consider but they all come with a cost.
In saying this it may well be worth it in the long run and could well be viable to set up depending on the numbers.
Richard Taylor | Australia's leading private lender
Also get a valuation on property B when it becomes a PPOR because if you sell property B in the future you will have a hard time working out which part is subject to capital gains tax and which part is exempt from capital gains tax as a PPOR .
Also you will have a similar problem with property A as it has changed from PPOR to investment property and it will also need a valuation done at this point as it is a change in the property status and is deemed as a capital gain event.
The onus on record keeping is infinitely longer for capital gains tax events as compared with normal tax records.
. I thought I had a good (novice) plan in the works but that seems to be unravelling before my eyes and would appreciate any advise .
in just my name ( bought it before we got married) and currently owe about $218K . The grand plan I hatched was to move into the IP (due to personal reasons) and make (
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