Forums / Getting Technical / Finance / Investment loan re-structuring or re-deployment options?

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  • Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 113

    Hi experts,

    Following is the scenario that I need advice/help/ideas/recommendation on:

    1. First IP (IP-1) with 3 separate IO investment loan facilities:
    – $400K for IP-1 itself
    – $150K used as equity deposit for another IP (IP-2)
    – $150K used as equity deposit for another IP (IP-3) with separate IO loan $500K

    2. PPOR home loan with outstanding limit of $500K.

    3. In the process of selling IP-3 and I am confident that sale outcome will pay off
    both $150K and the $500K plus more.

    4. Intention is to re-structure or re-deploy the $150K IO facility secured by IP-1 to reduce
    non-deductible loan, ie the PPOR loan $500K.

    How can I go about paying down PPOR loan from the sale proceed of IP-3 by the exact amount of
    $140K and yet be able to retain that loan against IP-1 as a deductible investment loan in the
    legit way? Is that possible at all or am I smoking the wrong stuff?

    I am not asking for grey area suggestion but genuine smart re-structuring.

    Many thanks in advance.
    FXD

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Seems like you have 2 loans related to that property – $150k and $500k.

    Are you selling at a lost?

    If you don’t pay off the $150k you cannot keep claiming the interest. You could keep the loan open as it is secured by another property you are keeping. But if you direct that $150k to the home loan you would still have another loan of $150k owing – yet not deductible and at a higher interest rate presumably.

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

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

    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 113

    Thanks Terry.

    I think keeping the loan open but not drawn may be an option and it may be used
    as a cash flow buffer for other IP related incidental costs. At least that’s the
    theories and ideas many other property experts seem to suggest.

    Rgds,
    FXD

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