All Topics / Finance / Re-financing question from newby

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  • Profile photo of allanmallanm
    Participant
    @allanm
    Join Date: 2005
    Post Count: 3
    November 9, 2005 - 12:35 pm

    Hi

    Newby question here:

    -5 years ago you borrowed 100k from BANK ‘X’ to purchase a property which you negatively geared
    -In 2005 the property is now worth 200k and you still owe approximately 90k to the bank.

    If you now refinanced the property with BANK ‘Y’ up to 80% of current market value (160k) and were to put that extra 70k of cash onto your own personal primary home mortgage, can you now negatively gear the property for the full 160k which you now owe? Or can you only claim against the initial 100k which you borrowed.

    Thanks!!

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913
    November 9, 2005 - 1:49 pm

    Hi Allan,
    Based on the above info the short answer is no, it’s the purpose of the loan that determines what is and isn’t deductible debt.

    However if your intentions were to use the $70K for future investment then that is a different matter,
    If this is the case then you should consider linking an offset account to your PPR debt and park the $70K in the offset until required for investment, this would help pay down your non deductible debt at a faster rate while the funds remain in the offset account.
    I hope this helps, Cheers.

    Regards
    Steven
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

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