Hi all,
I’m hoping you can offer advice on a finance/ tax issue concerning my IP.
I am 26 and bought my first property, an apartment, 18 months ago in Brisbane. I lived in it for this time and my partner and I parked all of our spare cash on the loan with the intention of redrawing it at a later date for a deposit on a house.
This time came about 1 month ago when we settled on a house. We redrew $38000 as the deposit and then rented out the apartment to tenants. This money was redrawn as extra payments on the loan, it was NOT in an offset account.
Now I have heard that if you redraw money from a loan for an IP then you can no longer claim the interest on that portion of the loan.
Does this apply to me, even though the apartment was still our PPOR and was not tenanted at the time of redrawing? What will the implications be this financial year and in coming years?
Thanks.
Hi Ash
Hate to say Yes it does apply to you as the purpose of the redrawn funds was for personal purposes.
The way your lender should have structured the deal originally was an interest only loan with 100% offset account.
An relatively expensive lesson learned i feel.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
redraw = new borrowings. So deductibility will depend on what the funds were used for.
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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