At the present I have an investment property that I owe very little on. I wish to purchase a second property to live in ,using the equity I have in the investment property. If I refinance and have the entire debt of both property's set against the investment property, does this investment property still act as a negatively geared property allow the tax benefits.
Essentially I will own the house I live in but the investment property will now have a substantial larger amount debt against it, allowing me to claim more tax back as it will now most likely be negatively geared.
Can this be done how I explained or is there more too it than that?
Thanks guys.
i would be interested in the answer as well
Hi guys,
Unfortunately not.
The tax deductibility of a loan depends on what the funds are used for. In your example, the funds are being re-drawn to purchase your own home, and the loan for your own home is not tax deductible.
If you take out a new loan against the investment property to purchase shares or another investment property (ie: a tax-deductible purpose), then you will be able to claim the interest.
It can be done indirectly and over time but borrowing to pay all investment related expenses and diverting cash to the new place.
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
Or the property can be sold to a Unit Trust and you borrow 100% of the market value and use the realised funds to buy a PPOR.
Stamp Duty will be charged but if the numbers add up it could be well worth it.
Bred and butter stuff at the moment and have lots of clients been doing this recently.
Richard Taylor | Australia's leading private lender
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