fxdaemonParticipant@fxdaemonJoin Date: 2013Post Count: 114
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.
FXDTerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
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.fxdaemonParticipant@fxdaemonJoin Date: 2013Post Count: 114
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.