All Topics / Legal & Accounting / Loan structures when buying a new PPOR.
Property A has been my PPOR for the last 8 years. It cost $75,000 and is now been valued recently at $220,000. The loan balance outstanding is $4,000. I have just purchased Property B ( loan of $280,000) which will now become my PPOR, but l fully intend to retain Property A which l will rent out. Is it possible to restructure the loans to do the following, I am thinking of accessing the equity 80% of the equity in Property A so that the loan balance on Property A will be $176,000 ($220,000 value @ 80%) therefore not attracting LMI and l can claim also the interest on that amount as a tax deduction. I would then utilise that accessed money ($176,000) to reduce the balance of the Property B (PPOR) to $104,000 ( $280,000 less $176,000) , which of course is not tax deductible ? Any thoughts would be welcomed.
Hi Timber..
I believe The purpose of the loan on property A is not for investment purposes (payind down the loan on Property so ‘not’ tax deductible..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorRedwing is correct.
Deductibility of interest is determined by the purpose of the loan not what it is borrowed against.
So to draw money to buy a new PPOR will not be deductible even if drawn against a rental property.
There are different strategies to get around this. Some quick and expensive, others slow and cheap.
Best to do some searching here and speak to your accountant. I am happy to give some tips over the phone if you need them.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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