Hi all,
I have an investment property worth about 250k with a loan of 90k. I also have a PPOR with a loan of 240k. What I want to know is if I refinance my IP so I owe 200k on it and reduce the loan on the PPOR by the difference so it would be 130k, will I create tax issues for myself?
It seems like a good way to make more of my repayments tax deductible which is why I'm thinking the ATO would have something to say on this.
i dont think you can do that. you can refinance your IP loan and get tax deduction benefit if the purpose of refinance is for another investment/ business, not for lifestyle or your home.
i think there should be a get around this issue but just cant think one at the moment…
Xodiac wrote:Hi all,I have an investment property worth about 250k with a loan of 90k. I also have a PPOR with a loan of 240k. What I want to know is if I refinance my IP so I owe 200k on it and reduce the loan on the PPOR by the difference so it would be 130k, will I create tax issues for myself?
It seems like a good way to make more of my repayments tax deductible which is why I'm thinking the ATO would have something to say on this.
What you would be doing if you did this is borrow $110,000 extra to pay down the home loan. If you did this the interest wouldn;t be deductible.
You should look at setting up a LOC on the IP and borrowing money to pay expenses and interest on this and use your freed up money to pay down the PPOR loan – seek advice from an accountant or tax lawyer first.
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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