Hi,
Is it possible to increase the size of your loan by taking out the equity in it? The purpose is to enhance tax deductions.
For example, bought a place for $500k, and the property is now worth $600k. The loan has been paid down $300k. Is it possible to increase the size of the loan to 80% of 600k being 480k, so that I can get tax deductions on 480k interest payments rather than just 300k?
Nice try but regretfully not unless of course the additional borrowing is used for investment.
Say you increase the loan by $100,000 and use these funds to invest in Managed Fund then YES the interest is deductible.
If you increase the loan and have a great holiday then regretfully not.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:If you increase the loan and have a great holiday then regretfully not.Would be nice though
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Yes it is possible. But the interest on the extra borrowings will only be deductible if they are used for investment purposes. in your eg the $180,000 – what will it be used for?
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
Damn that is quite annoying…
The reason I asked the question is that my PPOR at the moment is the property where I have paid down loan to $300k, however I would like to buy a new PPORy to live in and then rent out my current PPOR.
Is there a better method of doing this or is that extra $180k locked away in my current PPOR?
Pretty much locked away.
You may be able to do something by a carefully structured loan to pay the expenses of your investmnet property, including the interest.
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
brunowa are you married or own the property jointly ?
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
This is why people are encouraged NOT to pay down their PPOR but to get an offset loan instead.
I didn't know that when I started either but luckily we have stayed in our PPOR for a long time and won't use it as an IP.
Agreed Catalyst… I'm learning the expensive way!
Richard, I am single and own the property in my name only.
Ok shame spouses have their use for times like this lol
Altenative you could look to sell the property into a Unit Trust borrow 100% of the PPOR value and the entire interest would be deductible.
Yes you would stamp duty and land tax would be need to be considered but depending on the numbers there could be a good monthly saving.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
I am in a similar position and may be turning my PPOR into a rental next year. How can spouses be of use? Is it by transferring into one name? I'm in Victoria where I think Stamp Duty is waived when property is transferred between spouses.
Andrew
itsandrew
Go as far as you can see and you will see further.
Andrew
What you can look to do is purchase your spouses interest in the property (Course depending on your marginal Tax rates she might end up purchasing your interest in the property) whilst it is a residential owner occupied property and then when the property becomes available for rent the interest becomes a deductible expense and can be claimed.
Each State varies when it comes to Stamp Duty so check with your conveyancer.
Most lenders would have no clue how to undertake the Loan Transfer and in many cases wont allow (Had a classic case this week where the Bank said NO because they couldnt understand it so the forum client phoned me and we have the application already pre-approved subject to a letterhead valuation).
Drop us a line if you need some direction.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for the that Richard. Very helpful.
Andrew
itsandrew
Go as far as you can see and you will see further.
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