The interest can be claimed for anything purchased that is investment related.

Legals
Stamp duty
mortgage stamp duty
inspection flights/hotels (maybe?)
repairs
improvements
gardening
cleaning
rates
inspection reports
strata levies
buyers agent fees
research
etc

Keep your cash to pay off your home loan and borrow the rest (if you can).

Terryw
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It depends.

If you are just using the LOC for deposits on further IPs then it will work fine.

However if you intend to use it as a day to day account when related to investing, then watch out. The ATO considers any deposit to be a repayment. This means when you withdraw the money again, the interest may not be taxable.

Eg you purchase a $100,000 IP using your LOC. You deposit all your salary etc into this account and withdraw it out to live on. If you get $4000 salary put into your account, the balance goes down to $96,000. Now if you need $2000 for living expenses it will go back up to $98,000. The ATO will consider the balance for the investment to be $96,000 and the $2000 to be non investment related. Therefore you could only claim the interest on the $96,000 portion.

If this kept going on for months, years, then you could end up with a $0 IP loan and a huge non deductible debt.

A better way in this case would be to use a 100% offset account to keep them totally separate. Using the LOC for deposits and other IP stuff is OK, just pay the interest, don’t put all salary into that loan.

Terryw
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Hi I think Dram is correct.

In NSW you just state on the fron page of the contract where you want tenants in common (with % sahre) or joint tenants.

Loans will have to be joint at the same bank. Both parties income and expenses etc will be taken into account

Terryw
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This is a difficult question that many people face.

If you rent it out you will have to pay tax on all the rent, at the same time you will be paying interest on your new home whith after tax dollars.

If you sell it would be CGT free. So maybe if you can get a good price, it would be better to sell, and use the money to pay off your new PPOR and the left over for more investments. (You could also get a LOC secured on your new home for even more ips)

Terryw
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NewToPI

You could claim it as your PPOR, but the period is limited to 6 years. Since you moved into it again, the 6 years starts again. SO I think you probably could claim it as your PPOR. Check with your accountant.

Terryw
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Perth Guy

You could actually refinance to 90% of the value to withdraw a little bit extra equity.

Terryw
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NewToPI

You don’t say if you actually lived in the property in the period before it was rented out. If you did and you don’t own another property, then I beleive you could claim this as your PPOR and not pay any CGT. (Under the 6 yr exemption rule). Check with an accountant.

Terryw
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Andrew

Your going to have to come up with deposits to keep on going. If you can come up with about 20% deposits, you should be able to keep on borrowing indefinetly. If you can only come up with 5%, LMI will apply and then lots of restrictions

You can come up with deposits by growth in the property or by saving it up.

Another way is to borrow the deposits. One of my clients used a couple of credit cards for the deposit. But you have to know what you are doing.

Terryw
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There are legal firms that specialise in getting htsi defaults removed. I beleive that they threaten to sue the company that lists the default (whether just justifiable or not). i hear the costs are about $1000.

Generally telephone type defaults under $400 or not much to woory about. But some lenders, even low doc require a clear craa.

Terryw
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There was a posting made on the Somersoft forum at:
http://www.somersoft.com/forums/showthread.php?s=608dcb31ef648d9402e1a9c944173a1c&threadid=9980&highlight=mezzanine

But it has no been editied due to copyright infringements. It apears to be from an article called Flat Broke in BRW July 3, 2003

There is a link here
http://www.brw.com.au/stories/20030703/19427.aspx
But you have to be a subscriber to access it.

From memory, I developer was introduced to a group of NII clients. (The development company was unrelated to NII). The developer was offering mezz finance with nice interest rates. A lot of NII students signed up. The direcots of the company didn’t do things right, one even fled to NZ. The end result was a lot of people lost a lot of money.

Terryw
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