- Case07Participant@case07Join Date: 2010Post Count: 8
I am looking at refinancing a newly built tenanted investment property to another lender which the money loaned is only around 60% of the properties worth and am wanting to know if it is possible to refinance the property to the full 80%-90% without any tax implications to the negative gearing side of things. The extra money would be used to build a shed on the property but also recoup some of the money I personally put towards the start of the build. I am obviously waiting to talk to my accountant but thought I would ask on here while waiting to get in,any help or opinions would be appreciated.
TIATerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
If you borrow more money the interest deductibility will depend on what the money is used for. if you build a shed on the same property the interest on this will generally be deductible if the property including the shed is rented out.
But if you borrow to recoup cash paid the interest will not be deductible.
if you do this you should split the loan into 2 portions. The shed cost can go on the same loan, but the personal recoupment on a separate loans.Jamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
As mentioned above – destructibility depends on purpose.
Borrowing against an investment property to pay yourself back money that you’ve previously contributed wouldn’t justify a deductible expense.
I’m not an accountant though so please seek pro advice.