Scenario:
Own a property in NSW worth 375K. My wife and I lived there for 4 years before moving to Melbourne. We have been living in Melbourne for just under a year and we currently rent. At the moment we are actively looking to purchase another home to live in thus making our property in NSW an IP.
We owe 219K on the property in NSW and we are in the process of renovating the block which will cost us 35K. We are looking to refinance our loan in NSW to release equity for the renovation.
Question:
Can we borrow 80% of the value of the property and use the equity to conduct the following:
i) Renovate the block (35K)
ii) Use the remaining equity to put into a deposit + stamp duty + fees on our next home?Putting numbers to the scenario: Value 375K x 80%= 300k
Debt: 219k
Equity: 300k-219k- 81ki) Renovation 35k still leaves 46k
ii) Use the 46K to assist with the deposit and fees on another home leaving us in the following position:IP debt= 300K
New property purchased at 700K
Debt on new private property= 560K using cash (140k) plus equity (46k) to cover stamp+ fees etc from property in NSWAlso, will the interest on our new debt on our property in NSW be tax deductable?
Help on this topic will be greatly appreciatedIdeally you set up two line of credit loans, to make it easier at tax time.
One for the 35k investment loan that is tax deductible
and another line of credit for private use which is not tax deductible.My own bank allows multiple line of credit loans on the one property.
You must also be able to service the loan repayments also !
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