All Topics / Legal & Accounting / Re-Financing IP to reduce PPOR Loan

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  • Profile photo of KostaKosta
    Participant
    @kostadok
    Join Date: 2016
    Post Count: 7

    Hi Folks,

    Am hoping for a cheeky suggestion if about to Re-financing a current IP, drawing the IP equity to then pay off the loan of the PPOR whilst keeping the equity draw from the IP tax deductible?

    I have heard an option that once equity is drawn to place it into another IP Offset account, and then from there to transfer the funds into the PPOR. Would this show the initial IP equity draw was for “investment purposes” before funneling it into the PPOR? Perhaps slowly dripping it into the PPOR rather than a lump sum also?

    Any clarification/suggestions welcome!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    The interest would not be deductible.
    You would be borrowing to pay a private expense – doesn’t matter how many detours you take.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of KostaKosta
    Participant
    @kostadok
    Join Date: 2016
    Post Count: 7

    Thanks Terry,

    Thought that may have been the case. Is there any ‘legal’ loop holes to explore?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I just had a client sell the former main residence to a fixed unit trust. They borrowed to buy the units in the trust and can claim the interest. The borrowed money will then be used to pay off the new main residence debt.
    ATO allowed this under a private ruling application. No CGT payable, but stamp duty was payable in full – however they will get years of extra deductions which will cover the stamp duty costs in a few years.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 4 posts - 1 through 4 (of 4 total)

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