I am trying to buy an investment property, and I am organising the loan for it. My PPOR is already fully paid off. I am trying to get an equity loan from my PPOR to finance my IP. If this is the case, would all the expenses with the IP and the loan from the PPOR still be tax deductible?
Its the use of the funds not the security used that determine if the costs associated (interest etc) are deductible or not
Providing all the funds from the equity loan are used to purchase the IP they should be tax deductible.
However as always its always best to seek professional Tax advise
As has been noted above it is the purpose test that dictates the deductibility of the interest.
In saying this i would not be using your PPOR sole to fund the IP or indeed cross collateralising the 2 securities.
A mix and match of an equity loan and a standalone loan secured against the IP would be the way to go.
Once the IP increases in value a little bit of debt recycling to pay down the PPOR loan and you will eventually end up with a IP solely standalone.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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