All Topics / Finance / paying off ppor

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  • Profile photo of dfitzdfitz
    Member
    @dfitz
    Join Date: 2005
    Post Count: 3

    G'day guys,

    Is it possible to pay off my PPOR by borrowing against my IP's. I reckon by doing this I can claim on the interest on my IP's whereas I would be paying the mortage anyway on my PPOR. What would the ramifications be at tax time as the way I see it I would still be paying the same mortage in total but I could be paying everything off much faster.

    Regards,

    DFITZ

    Profile photo of eyes2theskyeyes2thesky
    Member
    @eyes2thesky
    Join Date: 2008
    Post Count: 11

    The ATO will look where your refinanced borrowings have gone. If the additional borrwoed funds are used for private purposes – non-deductible. They don't consider what the security of the loan is but what the borrowings has been used for.

    Profile photo of Event HorizonEvent Horizon
    Member
    @event-horizon
    Join Date: 2008
    Post Count: 90
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Never say No to anything.

    Normally No but if you sold your IP to a Trust and borrowed a 100% of the current valuation then the funds raised can be used to pay down the PPOR loan.

    Downside is you would incur Stamp Duty and possibly CGT.

    All depends on the numbers involved as to whether it is worth it.

    Richard Taylor | Australia's leading private lender

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    if your purpose of doing this is to avoid tax the tax department will not allow it.
    The purpose of what you are doing is also taken into account.
    So if the purpose is to try and reduce your tax through paying off a non income producing asset loan
    it could be seen or even a ruling may be taken that it is a tax avoidance scheme.

    A better scheme would be to only pay the interest of the investment loans and pay off the PPOR loan principal amount with as much money as possible without borrowing more money and see if you can pay it off each week rather than monthly as the repayment period makes a big difference to the loan over the long term. 

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    i agree.

    it is certainly possible to borrow on an investment property and pay down the PPOR loan – but there will be no tax benefits in doing so because the ATO looks at the purpose of the borrowings. It this case it is to pay down personal debt.

    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

Viewing 6 posts - 1 through 6 (of 6 total)

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