Hi
We have 2 loans one for PPOR and one IP for small unit
We want to change PPOR to IP (then we will have 2 IP loans) and rent a place to live in that is low maintenance and in area we want to live in)We also plan to top our PPOR loan with our car loan of $20000 and CC of $7000 (plan to use only our Visa debit and close CC)
If we d convert to IP can we claim for any improvements etc and interest? We deseperatedly need to replace the main bathroom as it has worn out bath vanity etc that cant be even repaired. Other improvements are just cosmetic as we had a complete new kitchen etc installed in 2005 Does our PPOR need to be IP for at least 12 months to calim any tax breaks?
Also should we change PPOR loan to IO and offset account now? and keep it that way once convertd to IP?Thanks
Be careful – sounds messy and you can get yourself into a tax mess if you don't understand.
Don't increase any loans now for the car etc as this portion will not be deductible. If you need to do that then make a separate split. Also do the conversion to IO asap and stop paying down the loan.
For tax just remember than any money taken from redraw = new borrowings and the interest on this will only be deductibile if the money is borrowed for investment purposes. If you want to do the bathroom etc the interest on money borrowed for this may be deductible once the place is on the market for rent. You should also be able to depreciate the new improvements and/or claim the repairs outright (depending on what is done). I would suggest you put in up for rent asap at a high price, while you do the work.
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
Thanks But we are jumping into it until we get all the information and decide whcih way to go
We will also speak with out tax accountant soon
Just getting info from here but not acting on any advice as yetWe do know though that we want to rent somwhere else as our PPOR is too big to maintain and our IP is too small to live in we need something in between It is not in our interest to sell any of our properties as yet
I mant we are NOT jumping into anything as yet
You must be logged in to reply to this topic. If you don't have an account, you can register here.
