All Topics / Help Needed! / Renting Out fully paid off PPOR

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  • Profile photo of gems256gems256
    Participant
    @gems256
    Join Date: 2009
    Post Count: 3
    June 24, 2009 - 8:27 am

    Hello to All

    I am currently looking at upgrading to a larger PPOR but I do not wish to sell my existing PPOR but rent it out as an investment property. This exisitng PPOR is fully paid off. There are no loans on it.

    What would be the most effecient method to claim any Tax deductions on the exisitng PPOR if I rent it?

    The exisitng PPOR is owned 50/50 between me and my partner. Can I borrow 50% of the value to "buy out" my partners share and claim the interest o this loan as a tax deduction? The house would then be in my name 100%

    Can this be achieved or is there some other simpler method?

    Thanks in advance

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    June 24, 2009 - 8:53 am

    Hi Gems

    Yes there maybe Stamp duty payable on the Transfer but if the figures work out then certainly worth considering.

    Better still maybe to sell the property to a Unit Trust and borrow 100% of the valuation / purchase price.
    This way the the interest on the entire loan will be deductible and can be used as deposit on your new PPOR.

    If you had used a 100% offset account from day 1 then this wouldnt have been a problem.

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 25, 2009 - 8:21 am

    ATO ID 2001/79

    Income Tax
    Interest expense: Funds Borrowed
    http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200179/00001#809189D2-7517-4af1-BAF0-1A36C3BB8640&numResults=0&command=%20m_objCurrentDocument.getElementById(%27veohrecs_fr%27).style.height%20%3D%20%27107px%27%3B%20m_objCurrentDocument.getElementById(%27Veoh_SpaceDiv%27).style.height%20%3D%20%2712px%27%3B%20m_objCurrentDocument.getElementById(%27VeohCompass.LoadingDiv%27).style.height%20%3D%20%270px%27%3B%20m_objCurrentDocument.getElementById(%27VeohCompass.LoadingDiv%27).style.display%20%3D%20%27none%27%3B

    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

    Profile photo of gems256gems256
    Participant
    @gems256
    Join Date: 2009
    Post Count: 3
    June 25, 2009 - 8:36 am

    Thanks Richard and Terry for your responses

    Having a link to the ATO Webpage is always helpful and I will examine the Unit trust option a little more as well.

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