Sorry I should have wrote "shouldn't" !
ie should not be a problem

There is more to it than just changing your IDs too.

There is a case in Vic, relating to the FHOG, where someone did that and didn't actually live there. This was proven as the electricity usage showed virtually no use during the period it was allegedly the main residence.

How do they take 28% of the principle and divert it to the shares? Possibly by making you pay extra or having the loan as interest only.

If they could do it you could do it.

Yes, probably correct (without knowing all your details).

73% of the combined loan as this relates to property A. The other 37% relates to property B.

So if you move into property B then only 73% of loan 1 would be deductible and this would be against property A.
Since you would be living in property B, the PPOR, none of loan 2, the 37% part, would be deductible.

But if you moved out and rented both then the whole loan would be deductible with 27% being attributed to property B.

That is a question that only you can answer. There are not just tax issues but lifestyle etc.

If property B was rented then loan 2 would be deductible too because it relates to this property. If you move in and out again you may still be able to claim the main residence CGT exemption.

I think it is best to not pay off loans. Imagine if you paid off the loan and then moved out again buying a new PPOR. You would have no or little deductions on that property while having a high nondeductible loan on the new PPOR.

Try an IO loan with a 100% offset to keep your cash in. You could end up paying no interest while you are living and then then when you move out move your money from the offset or keep it there depending on your situation.

Property A = Investment
Property B = Future PPOR

Property A has 2 loans against it.
Loan 1 = $150,000
Loan 2 – $58,000

Assuming loan 1 is associated with the purchase of the property the interest on this loan will probably be deductible.

But loan 2 was borrowed to pay into PPOR. So the interest on this loan is not deductible – actually it may be now that the house is rented but won't be once you move in.

Since this is on big loan you would need to apportion the interest.

Total loan is $208,000 so
Loan 1 = 150,000/208,000 = 73%
Loan 2 = 58,000/208,000 = 27%

So assuming this is an interest only loan only 73% of the interest will be deductible once you move into property B.

Only a portion of the interest may possibily be deductible.

Can u give a description with amounts of what happened/?

Sounds like you have set up the loan in a less than ideal fashion.

If you are going to rent the place out then I suggest you look at not paying the loan down and instead change to an IO loan with a 100% offset account.

The reno loan could be consolidated into the main loan as long as none of it was used for non property related expenses there will probably be no tax issues.

Hi Duckster

An option contract would not cost $8800. That is extremely on the high side! Maybe you put an extra 0 in by mistake.