I'm in the unfortunate position where my home loan was set up as a Line of Credit and it's been used in a way that has totally comtaminated the loan. Due to a change in life's circumstances I am looking at turning this home in to an IP but will not have the tax benefits associated with deductible debt. The house is in mine and my wife's name.
I have read a couple of times on this forum that one spouse can buy out the other spouse's share which will mean the new loan will not be contaminated as the purpose of the new loan is to buy the house. Is this right? Can this happen whilst it is still a PPOR or does it need to wait until we turn it into an IP? Opinions on this would be greatly appreciated as I would like to have a rough idea of what's possible before I see my accountant.
Andrew
itsandrew
Go as far as you can see and you will see further.
ok, the existing loan is fine. The loc is contaminated, how? Any capital improvements should be separated out & added to your capital base, other costs quarantined.
Problem is Scott that all the living expenses and improvements were run out of the one account. My understanding now is that withdrawing cash out of the LOC for living expenses is new borrowing and dilutes the purpose of the loan.
itsandrew
Go as far as you can see and you will see further.
In some States it will be cheaper to transfer the ownership prior to making the property an investment property.
This varies in each State so check with the local OSR.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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