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Thank you all for the very helpful responses – apologies I have been offline a couple of days.
So I have basically arrived at the following position –
Loan 1: Current property, i.e. PPR in Melbourne turned into IP
Loan 2: Equity release of 150k from IPLoan 3, new PPOR in Sydney @80% LVR (some deposit having come from Loan 2).
On the lending side, is it possible to have Loan 2 just added to Loan 1 so that it is not separate? I.e. can I have just the one, bigger facility with the same security instead of having them separate.
On the tax side, I understand the benefit of transferring the IP into my own name is that I will effectively create a new facility, for the sum of Loans 1 and 2 (i.e. 750k), the purpose of which is now entirely investment related = i.e. all becomes deductible. The transfer itself is exempt from stamp duty (and will be deemed to have transferred for market value).
Does that all sound correct?
Again, thank you all your help with all of this – much appreciated
Hi Richard
Thank you for your very helpful response – it is much appreciated.
I have requested that the loans be kept entirely separate with their respective securities. It is all through the same lender however (NAB) – I want to ensure they are separate too to maintain portability of the facility in the future.
In terms of tax, I am basically resigned to the fact that only the 600k debt on the IP will be deductible (as the released funds are being used as PPR).
I am married and will own both jointly with my wife. Can you expand on the point re transferring into my sole name? I am not sure how the interest on additional funds would be tax deductible – do we not still look at purpose, i.e. the acquisition of PPR.
Again, your help is much appreciated.
Cheers
