All Topics / Help Needed! / changing primary place of residence to investment
Hi,
Im new and would like to ask a question related to changing primary place of residence to investment.
I have a property in Concord NSW that I purchased in 2009 for 480000. It has about 250000 owing on the mortgage which was 376000 (126000 in offset account) when we purchased. The property has a value of about 650000 – 700000 today.
If I was to change this property to an investment can I re-mortgage on the current value i.e. 700000 – 20% to save mortgage insurance so have a loan of 560000 and buy another PPOR and tax deduct the servicing of the new 560000 loan or am I only allowed to tax deduct up to the 376000 value??
Any help on this would be greatly appreciated.
Kind regard
Hi Petrik
Welcome to the forum.
The test that determines whether a loan is tax deductible is “purpose” – what are the funds being borrowed for? If you’re increasing your loan to access a deposit to purchase a PPOR, that increased portion would not be tax deductible.
However, you are in a good situation due to your offset account. You should be able to withdraw those funds, which will boost your loan up to $502k. Once this property becomes an IP, that $502k should be deductible.
I’ll add the usual disclaimer that I’m not an accountant and you should seek specific tax advice.
Hope that helps.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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