All Topics / Finance / paying off ppor
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
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.
no you cant
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
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.
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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