Hi Everyone,
Hope someone can help me
Just a little confused with loan structuring..My circumstances:
PPOR is 110,000
IP 630,000
LOC 0 (20000 Max)i think im right in saying that my IP and LOC ( that pays the interest on my IP) are both tax deductable,
out of the 630000 borrowed for the IP, 20000 was added to my everyday account for renovation expences
Will this at all affect my 630000 loan? will it still be tax deductable if i use it for renovation costs? will it still be tax deductable if i use it to pay a lump sum off my PPoR loan?
I suppose my concern is that i might have cross collateralized my loans?Thanks in advanced
Hi Strataman
If the $20K was used for renovation on the IP then the interest will be deductible but if it was for the PPOR then NO.
Yes not normally a good idea to X collateralise your loans but at the moment it is fairly simple to uncross them.
Longer it goes and the more property you purchase the bigger the issue will become.Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks for your reply Richard…
This may sound dumb.. but how should i go about uncrossing the loan.. should i ask the bank to have that 20,000 under a loan of its self.. or should i just use that 20,000 and pay it off on my 630,000 loan and use personal money to renovate? or…………..?Thanks again
Without being funny strataman it is very unlikely the Bank will:
1) Want to do it for you and
2) Understand why you even want to do it.It is not in the Banks interest to uncross your loans as the loose an element of security.
Of course it is in your interest to do so but the 2 matters dont go hand in hand.Get your Broker to sort out the mess for you and at least that way you now it is done right and in your interest and not the lenders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Strataman wrote:Hi Everyone,
Hope someone can help me
Just a little confused with loan structuring..My circumstances:
PPOR is 110,000
IP 630,000
LOC 0 (20000 Max)i think im right in saying that my IP and LOC ( that pays the interest on my IP) are both tax deductable,
out of the 630000 borrowed for the IP, 20000 was added to my everyday account for renovation expences
Will this at all affect my 630000 loan? will it still be tax deductable if i use it for renovation costs? will it still be tax deductable if i use it to pay a lump sum off my PPoR loan?
I suppose my concern is that i might have cross collateralized my loans?Thanks in advanced
if you have borrowed $20k and put it into your savings account then later use it for investment purposes the interest will not be deductible as it will no longer be borrowings, but savings.
If you are using the LOC to pay the interest then this could be deductible, but this will depend on the structure – the ATO could disallow it.
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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