Hi ,
I need some advice about eventually turning our our existing PPOR into an IP and buying a new PPOR. Initially when we made the purchase about a year ago this wasn’t the intention but now I am considering as an option to do so in about 5 years time.
Our scenario is:
– We bought our PPOR approx 1 year ago
– Currently have a P & I loan with an offset account
– Have got some surplus funds in our offset account and have also upped our repayments for the past year (realise now this wasn’t a good idea, I didn’t think it mattered whether the money was sitting in our loan or offset account)I am thinking of changing the loan now to an IO and keeping the offset account to hinder any further contamination of the loan.
I realise that in 5 years time when it comes to changing from PPOR to IP, I will not be able to bring the loan back to its full amount (for tax deductibility)as I have been paying compulsory principal payments for a year.
However can I rescue the extra repayments I have made?? I.e if I redraw back the extra repayments and put them back into the offset account, and do it NOW in 5 years time will the tax office look at these redrawn funds or are these funds just treated as funds in the offset account??
Is it already to late to fix this scenario?
Appreciate any Advice
Jarad
Yes it is too late to fix but you could still do it and then take your chances on an Audit come the time you rent it out.
Interest only is the way to go with every loan as it gives flexibility.
There is of course times when you want and need to pay down the principal but from what you have stated your plans are no need at all.
Richard Taylor | Australia's leading private lender
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