Convert Principal place of residence (PPR) to Investment property
I am currently living in a home that I purchased 4 years back in joint name with my wife. Current valuation 400K, loan balance 340K. AFTER RE-FINANCING I redrew 80K to put deposit on buying a new home. I would make the new home as PPR in 8-9 month's time. New home is worth $450K, loan balance $360K.Looking at the fact that current market is not a good market to sale and both of us does not have common agreement to sale, we would like to keep the existing property and rent it out.
I would like to know possibilities / scenario where most of my outstanding loan ($340K + $360K) is part of investment and hence claimable.
If some accountant can offer a feasible solution – I would be happy to use their services in setting up the structure.Thanks,
KapsThe ATO looks at the purpose of borrowings, so your $80,000 borrowed for the deposit on the new PPOR wouldn't be deductible. Only the interest on the existing loan balance excluding the withdrawal would be – if the place is rented or you are attempting to rent it out.
Setting up a structure now is not going to help you as you already own the house and it is highly geared.
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
I read on another forum where the husband sold his 50% to his wife and she sold hers to him and changed a few other things. They had to spend some dollars on associated costs but ended up having the PPOR as an investment IP. Dont know if the money spent to do it ended up covering what could be claimed but a good accountant should be able to advise you further. As mentioned previously the ATO is always on the watch for these type of situations.
C2
Yes this can happen, but as you say, its likely to be classed as tax evasion since the main purpose was to avoid tax.
Well thats what the tax man will say, its really pushing the limits that one.
But thanks for example.
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