Hi,
Would appreciate comments on my situation from knowledgeable people.
Thanks,
Paul.Current Property:
1. PPOR – House in Perth on subdividable block with P&I loan owing $100,000 over 25 years. Estimated value $300,000.
2. IP – Villa in Perth. 5 year interest only loan of $101,000 (taken out in August 2000). Estimated value $200,000. Postively geared.Both properties are currently in my name only (recently married).
Other Debts – Nil
Income
Myself $75000 gross per annum
Wife $25000 gross per annumPlan
Build new house in 2 – 3 years time (when building boom slows) at rear of current PPOR. This will be new PPOR. My current PPOR will be rented out.I will be also on the lookout for good value IP’s. Not buying now due to overheated market.
Questions
For new PPOR what is the best way to finance?
The old PPOR will become an investment property – How is this viewed by the tax office? I want to maximise tax advantages so would like to owe little on the new PPOR. Should I look at some sort of investement structure?Paul, anything that you borrow to build your new PPOR will be non tax deductible no matter what the security.
If you have not already got an offset account for your PPOR, set one up, and pay all extra repayments into that account – not off the loan. If you can, refinance now to interest only.
That way you might be able to keep the loan at $100K, which will be all tax deductible (providing that that money was only used to purchase the house, and not to consolidate other debts) when it becomes an IP. Any extra money you have put in your offset account will then be used to pay towards your new PPOR debt.
Cheers
MelMel,
Thanks for your reply. It has cleared up a few things and given me something to think about.
Regards,
Paul.
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