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  • Profile photo of JadlakJadlak
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    @jadlak
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    July 24, 2009 - 11:26 am

    Both properties have risen something like $100k since we bought them.

    Profile photo of JadlakJadlak
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    @jadlak
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    July 24, 2009 - 11:06 am

    Hi Richard, thanks for joining in :)

    So if I sell to a Unit Trust or a Discretionary Trust (cause I was thinking that might be step 2 as I have 2 kids and a stay at home wife) then I get slugged for capital gains? Ouch… surely that’s gonna be more hassle than it is worth. And I thought if I bought hers, and she mine… again capital gains.

    The trust idea sounds better though – because I think it makes us more flexible if/when my wife returns to work in the future, or if our employment status changes. Still I hate the thought of handing over money to the government when I’m technically not selling it! just swapping it about in my family and/or trust.

    Profile photo of JadlakJadlak
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    July 24, 2009 - 8:57 am
    Terryw wrote:
    What is the purpose the funds were used for? If the husband lend the wife money to pay down the investment loan, then this is just refinancing debt – so should be deductible, but his net result is the same. If any of the excess funds are used on the PPOR loan then the purpose is private and the interest on this portion won't be deductible.

    Thankyou all for your helpful posts so far – I’m absorbing as much as I can.

    Ok, I understand that I cannot pay down my PPOR from refinancing my IP’s. But paying down my wife’s investment property (via dropping money in an offset?) sounds like a good strategy.

    Terry – I really like your suggestion about using LOC’s for everything. But it sounds very scary! However what it does do is allow me to rapidly pay off my PPOR reducing my ‘bad’ debt by swapping it for ‘good’ debt. So it might be a neat idea in the short term. Perhaps something to discuss with an accountant.

    I’d still like to get LOC’s for the 20% deposits during a refinance. Perhaps I can use the extra funds gained from that process for my PPOR? I.E. 20% LOC pays for deposit and that deposit money that I recover (which was my hard earned cash in the first place after all…) I can use for my offset on my PPOR. Hrmm… sounds a little shakey.

    Profile photo of JadlakJadlak
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    July 24, 2009 - 6:14 am

    Refinancing both your mortgages should yeild:

    80% of Land(0.8*165k) = $132k which should give you an additional $39k
    80% of PPOR(0.8*350k) = $280k which should give you an additional $30k

    Providing you can finance the additional $69k of debt. Can't see much more than that floating about from those assets though…

    You could mortgage further than 80% on your PPOR and pay LMI but that really seems like squeezing yourselves for everything you have – still perhaps a way to get some more.

    Profile photo of JadlakJadlak
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    July 24, 2009 - 5:09 am
    Dan42 wrote:
    I think you would have a hard time explaining to the ATO why your interest bill was $12,000 one year and $20,000 the next.

    maybe not: "Because I re-financed the property to pay down my wife's investment property that she is not able to sustain due to her not working presently"

    or something along those lines.

    Profile photo of JadlakJadlak
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    July 24, 2009 - 1:56 am

    Thanks for your response Dan & Trent

    @dan
    How come I can't use LOC for re-financing? I thought a refinance was basically pay out old loan and get a new one. In which case I could use a LOC for 20% and an IO mortgage for the remaining 80% – thus giving me maximum negative gearing on the property.

    Also I thought that if I used the gained funds to pop in a offset against my wife's IP then that was for investment purposes, thus covering that rule. And then I could draw against the offset to fund future investments once my wife returns to work and we want negative gearing to reduce her taxable income.

    @trent
    As I understand it though, if I use the money to pay off my PPOR then the interest on my new loans is not tax deductable (which kinda negates the reason to pay off the PPOR in the first place if all I am really doing is shifting the debt to my IPs)

Viewing 6 posts - 1 through 6 (of 6 total)