Hi,
I currently live in my unit. I owe 60k on this. The unit is valued around 380 – 400k.
I also own a an investment property, a townhouse that I rent out. I owe 420k on this. Value I would guestimate at around 600k.
I am wanting to move into the townhouse. Is it possible to take all the equity I have out of my unit to reduce the loan on the townhouse, then rent out the unit so I can claim deductions if negatively geared.
Basically the same scenario I am in now but swicthing properties
cheers
freaky,
I reckon you’ll find the answer is yes and no: yes, you could refinance that way, but no, you couldn’t claim the tax deductions so there’s no point.
The tax man doesn’t let you do this: he essentially only lets you claim deductions on the money you borrowed to finance the purchase. This is one of the big downsides to turning a PPoR into an IP – tax-wise, you really want max borrowings against the IP and min against the PPoR, but once you start paying it off you can’t “top-up” the loan and claim deductions.
Cheers,
MickI agree with Mick
You can shift it, but can’t claim it. Unless,,,,
You sell the property to your trust, or if owned by you and spouse, one of you buys the other out, borrowing money to do so with the proceeds going into the PPOR loan. But there may be CGT and stamp duty payable.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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