Hi, I’m new in the property game and am looking at putting myself in a better long term position so any good advice would be appreciated.
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My current situation is as follows.
I have 2 property’s, the first which is my PPOR is valued at approx $500k+ it has a P&I mortgage of about $225k on it. I also have an investment property which is valued at about $450k with an interest only mortgage of about $365k and a rental income of about $18k per annum.
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I’m looking into re-structuring the loan for reasons such as tax benefits, reducing loan amount as quick as possible and overall better position. From what I’ve been told I have the ability of claiming either as my PPOR as I have lived in both (this may or may not matter for my circumstance)
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An option I’m thinking is to refinance as much as possible onto the investment property approx $450k, and reduce the loan amount on the PPOR to approx $140k and any left over funds paying off the PPOR. This set-up would be tax effective but am I actually better off in the long run?
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Some other info is, I’m in my mid 20’s, not thinking of selling either at the moment, and I do eventually want to make further investments.Erg01 wrote:
An option I’m thinking is to refinance as much as possible onto the investment property approx $450k, and reduce the loan amount on the PPOR to approx $140k and any left over funds paying off the PPOR. This set-up would be tax effective but am I actually better off in the long run?
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Some other info is, I’m in my mid 20’s, not thinking of selling either at the moment, and I do eventually want to make further investments.Hi Erg01
Welcome to the forum.
Long story short – it's not possible.
Tax deductibility is determined by "purpose" – if the purpose of the loan is to pay down your PPOR then it won't be deductible (as it's not an investment).
For what it's worth, your current structure looks ok. Do you envision ever turning your PPOR into an IP?
Cheers
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]
Erg01 wrote:
An option I’m thinking is to refinance as much as possible onto the investment property approx $450k, and reduce the loan amount on the PPOR to approx $140k and any left over funds paying off the PPOR. This set-up would be tax effective but am I actually better off in the long run?This would not change the tax deductibility of the loans as you would be borrowing to pay personal debt.
What you should be doing is to get tax advice on using a strategy which enables you to borrow to pay investment debt and other costs.
Terryw | 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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