Here’s the scenario ;
Current PPOR value $600K , loan #1 mortagae $300K with $300K cash in offset account, in both mine and wifes names.
IP purchased for $500KLoan #2 80% $400K interest only loan in my name.
Loan #3 20% +costs ~$150K interest only loan secured against PPOR in my name only via security guarantee from the wife.
The idea is the IP has max tax deductions against my income, with no x collat.
Lets say In a few years we plan to move into the IP.
Remortgage the loan #2 $400K to P+I + offset, take our $300k cash into the new account.
loan#1 300K remortgage to IO , will still be in joint names. (not ideal for tax but no show stopper.)
Loan #3 ~$150K interest only loan remains the same ? should still be fully deductable against my income as the purpose is for investment, the security has not changed, only the actual investment has changed ?dirty sanchez wrote:
Lets say In a few years we plan to move into the IP.Change of status CGT event if you plan on claiming this property as PPOR otherwise you can rent out original PPOR for 7 years and keep it as PPOR CGT Status but then you can't claim IP2 as new PPOR CGT status. Can't claim PPOR for two properties at the same time. Capital gains tax implications.
PPOR
CGT exempt
Rental – no longer CGT exempt
Value600k
Valuation needed 700k
Sell 800k
100k CGT exempt
!
! 100k capital gains tax liabilitydirty sanchez wrote:
Remortgage the loan #2 $400K to P+I + offset, take our $300k cash into the new account.Change of status CGT event if you plan on claiming this property as PPOR otherwise you can rent out original PPOR for 7 years and keep it as PPOR CGT Status but then you can't claim IP2 as new PPOR CGT status. Can't claim PPOR for two properties at the same time. Capital gains tax implications.
IP2-rental —- —- CGT liability-
PPOR – CGT exempt
Value500k
Valuation needed 600k
Sell 700k
100k CGT liability
!
! 100k capital gains tax exemptIf you do not get valuations done when you sell in the future you will have a hard time working out the previous values of the properties to work out capital gains tax liabilities and exemptions.
Once you file a tax return from the new IP address now PPOR it will most likely be your evidence that your PPOR has shifted.
However you may need to inform the state revenue office of where your PPOR is for land tax purposes.
dirty sanchez wrote:Here’s the scenario ;
Current PPOR value $600K , loan #1 mortagae $300K with $300K cash in offset account, in both mine and wifes names.
IP purchased for $500KLoan #2 80% $400K interest only loan in my name.
Loan #3 20% +costs ~$150K interest only loan secured against PPOR in my name only via security guarantee from the wife.
The idea is the IP has max tax deductions against my income, with no x collat.
Lets say In a few years we plan to move into the IP.
Remortgage the loan #2 $400K to P+I + offset, take our $300k cash into the new account.
loan#1 300K remortgage to IO , will still be in joint names. (not ideal for tax but no show stopper.)
Loan #3 ~$150K interest only loan remains the same ? should still be fully deductable against my income as the purpose is for investment, the security has not changed, only the actual investment has changed ?What was loan 3 used for? Sounds like it was used for the deposit and costs for the IP. If so and your move into the IP it will no longer be an IP and then loan 3 wouldn't be deductible.
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
Oh, and I wouldn't make the IP loan PI but leave it as IO with an offset. park your $300k in there without paying the loan down in case you move again.
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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