Hi all,
I have read an article from Andrew Gardner http://www.investorsedgefinance.com.au on strucuring loans ie, dont X-collateralise as banks can use the AMMC "all monies mortgage clause" and put a net around all your portfolio incl. PPOR if in default,etc AND BEST To USE a cash transfer instead of an equity transfer for deposit into new property.– QUESTION: I have an offset account next to PPOR and not much useable equity – should i use $70k in offset to use as deposit/s for IP as a stand-alone or can I put offset money into PPOR loan thus reducing non-deductable debt and transfer debt as a cash deposit into IP loan? Details: PPOR loan=280k PPOR value= 320k after: PPOR loan=210k Equity=88k(80% of 110K) use equity for finance of full amont of IP say 440k LVR 80%. CAN THIS BE DONE LIKE THIS? main reason was to reduce non-deductable debt on PPOR and continue to transfer out of PPOR as portfolio grows and pay off home first. Hope this makes sense ..to the mortgage brokers on the forum and those that are savy…
Your help appreciated Matt
Matt
If you pay off the PPOR loan by $70,000 you will be saving approx $5,600 pa and if you then re-borrow $70,000 from this loan for the new IP you will be paying an extra $5,600 in interest, but this should be deductible. Assuming a 20% marginal tax rate, you would be getting back about $1,120 in extra tax per year.
If you just use this $70,000 from the offset, you will not be able to claim the extra $5,600 pa in interest you will be paying on your PPOR loan. This is because the $70,000 won't be borrowed funds.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry,
Thanks for your help, this makes things clearer
Cheers Matt
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