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  • Profile photo of shekarshekar
    Member
    @shekar
    Join Date: 2004
    Post Count: 1
    August 24, 2004 - 1:43 am

    Hi

    Is it possible to convert the current residence as an investment property and acquire new property as your residence?

    If possible, can the mortgage be restructured such that high mortgage value on the investment property and low mortgage value for the residence. Currently 80% mortgage value in the residence property is paid, so wanted to use this value to acquire new residence. Take investment mortgage to cover the investment property.Are there any tax laws(implications)that will block in doing so?

    Thanks & Regards
    S.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    August 24, 2004 - 1:48 am

    It s ll possible however you can not change the debt around to maximise deductibility.

    ATO deems that the purpose of the loan determines deductibility.

    So if you borrow to buy the new home then no deduction – even if you are borrowing against the IP.

    Hope this makes sense – can be a tricky concept first time round.

    Simon Macks
    Mortgage Broker
    http://www.mortgagehunter.com.au
    0425 228 985

    NODOC Loan – 65% Loan – No questions asked!

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 25, 2004 - 1:54 am

    There may be a few ways to increase debt in a way to keep the ATO happy.

    eg. You could sell you share to your spouse. They would have to borrow money to buy your share (increasing the deductible debt). They money your spouse pays you would be tax free (as from main residence) and this could go towards your new house. You may even qualify for exemption of stamp duty as you are spouses!

    Another method invloves selling your house to your turst. Stamp duty would be payable, but the whole debt would then be claimable (ie including increased loan amount) and you would have all the benefits of a trust. And no agent’s commissions.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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