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have been living in my current place of residents for 4 years purchased the property @ $309K, got the loan down to $170K then refinanced the loan to purchase a block of land for $185K and now deciding to build on this, which will result in a seperate mortgage with renting out the current property.
i have a few questions in mind- refinanced mortgage planning to switch to interest only as this property will be investment only
- new mortgage will consist of principal and interest of approx $220k
- for tax purposes can i only claim interest payments on the $170k before the land was purchased as surplus funds within the loan were used to purchase the block of land? or is there a creative way of making the $170k higher
- would it be advisable to put forward a proposal to the bank for the rented property to demonstrate viability and how would i go about doing this
planning to do this within the next 6 months with a combined income of $120K, are the suggestions above feasible.
thanks for your help
Darren
To answer question 3, yes, your deduction for interest is limited to the interest on the $170k to buy the first property. Interest deductibilty is determined on the purpose of the loan, not the security offerred.
