I’m sure this has been done to death somewhere on the web before, but I`d like some knowledgeable opinions please.
I have a 2 loans secured by the same IP
I want to start a family and use all possible funds to fund lifestyle / pay down PPOR and not the IP.
I am currently using Salary funds / credit card to pay expenses and rental income goes into my salary account.
Can I redraw from one loan to pay the other loan as well as all other IP expenses?
Can I claim interest deductions on both loans as they are for the same income producing asset?
Should I just use redraw to pay expenses and not interest and claim interest deductions on both loans?
I am simply forgoing the future capital gain to use excess funds now.
Kindrest regards Investors!
Capitalisation of interest can be OK with the ATO in certain situations, but not across the board. You’d want your accountant to be 110% happy with the structure before going down that pathway.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Yes I thought as much.
I am also not sure on this situation
Can I at least use the loan no 2 / borrowed funds to pay expenses (excluding loan no 1 interest) and claim the interest on the loan no 2 for repairs / rates etc.
Expenses could be $5-10,000 a year and that money could be better off reducing my PPOR
Interest on that may be $500 and as its used to turn an income it too would be deductible.
Rental income would pay the loan no 1`s interest and there fore not capitalizing it.
Surely this = Safe with the ATO?
Thanks again
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