I have recently decided to rent out my current PPR and purchase a new PPR. My current mortgage of $285,000 has a remaining balance of $85,000 with $200,000 available for redraw.
I wanted to redraw $200,000 from my current PPR mortgage to help purchase the new PPR and to increase the debt on what would then be the rental property (IP). I have since been told however that if I redraw the money this way that the tax deductable amount for the IP will only be $85,000.
How can I get around this?
Can I buy my wife out of her share in our current PPR to increase the deductable debt to $285,000 + stamp duty & legal fees?
Short answer = No
Long answer = Nope
But you could buy the part of the property owned by your wife and borrow 100% for this plus costs. How much is it worth? What state is the property in?
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
Thanks Terryw. I should have worded my query better but your reply of buying my wife's share of the property and borrowing 100% plus costs is what I tried to say. The property is worth about $420,000. It is about 14 years old but in good condition.
Hi
If it is worth $420,000 then you could buy your wife's share which would be $210,000 (assuming 50% ownership).
That means you could borrow $210,000 on top of your share of the existing loan $43,000 = $253,000 debt. you could borrow stamp duty and other costs too.
Your wife would end up with $167,000 approx cash which you could use to pay for the new house with.
If in Vic it may be able to be done without stamp duty. If NSW stamp duty would probably apply. So you would need to work out if the tax savings would be worth the costs involved.
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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