I got a situation need to re structural loan. Any advice are appreciated.
I have a IP value at 400K with 80% loan (320K). I sub-divide the land at rear into a new lock -separate torrent title. Front house is remained. Now it is the time to re-structural the existing loan. I prefer to keep loan separately. 1 loan for the new created block and 1 loan for the existing house and land.
To avoid mortgage insurance, new loan for both block need to be 80% or below.
When the bank revalue existing house, valuer come back with quite low value, only 300K. The new loan for existing house have to bring down to only 240K (at 80% value). Current house still have a tenant there.
As in the tax point of view, should I keep the loan for existing house as is at 320K and link it with the new block of land? Or do separately 2 loans? one for the existing house at 240K the remain 80K will need to put into new loan for the new block.
In that case, if I plan to build another IP in the new block. Will the interest of 80K is tax deductible during the time from new block created to when the tenant move in? and If I move in to live in the new block, I presume 80K loan will become tax non deductible?
ThanksThink it thru.
The one loan was used to purchase the property as a whole. So it can be attributed to both blocks. You will need to speak to an accountant about the portions but it should be split into 2 loans. You can have both loans stand alone with no cross security used.
Tax deductibility shouldn't be an issue if you intend to build and rent or sell.
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 Terry for your response. I am very appreciate your opinion.
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