All Topics / Help Needed! / If I use a top up loan to pay down my PPOR from my IP property, will it be tax deductable?

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of zeablezeable
    Member
    @zeable
    Join Date: 2009
    Post Count: 27
    June 7, 2010 - 6:52 am

    Hi,
    We have a PPOR, which we still owe approx $140k and our bank have approve for us to do a top up on our IP property which we currently owe $435k, which will bring our mortgage to $435k + $140k = $575k.

    My question is, will this top up of $140k be tax deductable?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 7, 2010 - 6:55 am

    no

    You will be borrowing to pay private expenses.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 7, 2010 - 6:57 am

    But, there are ways to improve your situation.

    Talk to your tax adviser about capitalising interest on your IP loan – which will free up cash to pay down the home loan. Also look at borrowing to pay all expenses of the investment loan – such as insurance, rates, repairs etc.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of SandraLSandraL
    Member
    @sandral
    Join Date: 2010
    Post Count: 45
    June 7, 2010 - 7:36 am

    Zeable,

    as Terryw pointed out, if you borrow against your IP to pay down a loan on your PPOR, the interest is definitely not tax deductable. What counts is the purpose of the borrowing, which is to reduce your PPOR loan. The best thing you could do is pay down your PPOR loan as quickly as possible with any surplus funds you have, rather than paying off your IP mortgage (keeping in my mind I am not a financial advisor).

    Profile photo of god_of_moneygod_of_money
    Participant
    @god_of_money
    Join Date: 2008
    Post Count: 970
    June 7, 2010 - 9:05 am

    Terry… Debt recyling :)

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 7, 2010 - 9:07 am

    yes, recycling is better than wasting.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of zeablezeable
    Member
    @zeable
    Join Date: 2009
    Post Count: 27
    June 8, 2010 - 1:26 am

    Thanks guys. That was a big help!

Viewing 7 posts - 1 through 7 (of 7 total)

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